McMil's Trading Strategies: Read Only

[McMil]

RULE OF THUMB

For the most part I've noticed something that is prevalent in many traders as well as a very bad habit that took me the better part of my first year of trading to let go of. This isn't so much as a bad thing in as much as it's a thing that prevents us as traders to be mentally prepared on our open positions on any given equity....

Timing!!!!

Timing is the secret to comedy as any comedian will tell you; or have you ever had a friend who can't tell a joke for crap? It's not the joke it's the cadence of the joke when telling it...that same joke can be told to you and you'll lyao...

Same idea...but this is how it works in your trading day...

It's important that you get an idea on the direction of the PM action as well as the AH from the night before...for this I suggest that you set you minute charts to track for a 24hr cycle so that you can visually see the moves throughout the AH and PM hours as well as track the movement from other foreign exchanges while you were asleep or off line...

Now, once you have an idea of what has occurred during the 24hr cycle your able to snatch a glimpse of the possible day activity, i.e. a gap up to an elevated level the morning after a huge move up on huge volume is not going to be a continuation but will become a fade to short rather to be a buy in; unless there is more good news to come...remember the Three Gaps Up pattern as an example...

Now, regardless of anything that you "think" may happen in either direction this is your RULE OF THUMB at the open of any given day:

THE FIRST FIFTEEN MINUTES OF THE DAY ARE GARBAGE!!!

Yes, that's what I said...garbage...they don't mean a damn thing to the action on the day at all...

Most of it will be some profit taking off the top or some elation buying by the retailers with $$$ signs in there eyes chasing a trade they didn't get in on yesterday...

The real move on the position is going to come anywhere from 9:45 to 10:30 in the morning and will then set up the action for the rest of the day...

If you don't believe me pick a stock that your not emotionally involved in, i.e. you have no skin in the game so your not vested and just watch it for a few days and you'll see that it will be in flux for about the first fifteen to twenty minutes from the open and then the " move on the trade" will develop over the next half hour to fourty-five minutes...

There is more to how this is played, but this point action or inaction on your part has two purposes: 1) keeps you out of the sucker play first thing out of the gate that the sharks are looking for the retailers like to jump on and 2) gives you time to control your emotions so that your thinking and not reacting...

My own worst trades were always on emotional impulses in or out and taking/closing a position at the open only to have it reverse and leave me with my mouth open...