Had an interesting conversation yesterday with a trader about trend trading. She was under the impression that trend trading was only a long-term concept. I said day traders can trend trade too.
Here is how;
First you need to choose a time frame. There isn’t a right or wrong trend, it simply needs to be the correct one for you. Be aware of one important concept, the shorter the trend, the more often it can change. This means you will be day trading both long and short often.
For a day trade, I would say this represents time frames from 15 minutes or lower for a trend.
For an intraday position trader, 30-60 minutes is a good starting point for a trend.
The key to remember here is to separate your trend time frame, from your entry time frame. Your entry will be a lower time frame. For example, if your trend is the 15 minute chart, your entry signal should be on the 1,3 or 5 minute chart.
To succeed, and make things easier for yourself, never fight your trend. This means you eliminate one side of the market, and only look for signals in that direction.
One last note, be sure to have a definite method of identifying a change of trend. If this isn’t clear, it will be challenging to trade with conviction.
If you have any questions about trend trading, leave your comments below.
Stock Market Today: Map of the S&P 500
(click the map for a full view)
SPY price action closed above the 50 sma. Light volume or not, this is an impressive bounce of the $200 support. If we can remain above this level, continue to look long. Despite what many are saying, the SPY is not overbought. Set to open lower this morning (7:15am), I like the long better if the SPY can climb above the open and above yesterdays close.
(click the chart for a full view)
- Impressive follow through yesterday but most stocks traded on light volume.
- Oil/energy ETF’s should be a sell-short today.
- We mentioned yesterday that healthcare stocks were getting a bid, many closed strong again: AGN, BIIB, BXLT, CELG, CYH, GILD, HZNP, ILMN, MYL
Technical Analysis | Charts of Interest
AMGN ascending wedge and quadruple top makes it a perfect candidate for a breakout. The profit target is $176.80. You can day trade the stock each day up to that level, or hold for a swing trade.
(click the chart for a full view)
Light Volume SPY Gap Closes Above 50 SMA 12-30-15
> 20sma | positive the last 5 days | closed 2% higher from the open: TEAM, TSLA, SKX, KSS, ILMN, AMZN, BXLT, ROST
< 20sma | negative last 5 days | closed 2% lower from the open: sm
Bullish Ideas ATR/Volume/Price: ILMN, AMZN, CELG, TRIP, GOOGL, FB, ADBE, WBA, AVGO, ACE, DLTR, HON, LRCX, NEE, FSLR
Bearish Ideas ATR/Volume/Price: xon, lng, dis, nsc, apc, slb, wmb, cf, jwn < 49.34, ksu, dvn, bhi, wdc, pxd, kmx
Weak Stock Weak Close: feye, sm
Strong Stock Weak Close: SCTY, CSIQ
Weak Stock Strong Close: kate
Strong Stock Strong Close: BXLT, ILMN, ROST, AMZN, TSLA, TEAM, HCN, BA, CRM
20 day Breakdown: hfc, sm
20 Day Breakout: KSS, ILMN, AR, AMZN, TGT, CERN, CCL, KHC, GOOGL, HCN, ATVI, UTX, WBA, STX, MSFT, CCI, ACE, HON, LVLT, LOW, LRCX, PM, PEP, DUK, CAH
2x Normal Volume: ROVI
Watch List Longs: AMGN > 165, TRV (116 profit target), UNH>120, GE, MO, MCD, PM, JNJ, KO, HON>106, INTC, MGM, ADBE, MSFT, DAL
Watch List Short: dis, slb, hal, cop, bhi, akam, tol, m, ntap
Inside days: dis, dal, wfm, cbs, ual, gme, lng, cyh, de, thc, kors, rlyp, dks, bhi, qihu, nsc