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Intraday Trading Strategies Overview

This document provides lessons on intraday pattern trading. It discusses key terms like "hitting the bids" and "paying the offer". It then analyzes specific stocks like BTU that showed momentum plays, gap ups, and bounces off support and resistance. Simulation examples demonstrate trading weak stocks that fail to hold support. The document stresses the importance of diligent preparation, maintaining a journal, and learning from other traders to improve one's intraday trading.

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collegetradingexchange
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231 views12 pages

Intraday Trading Strategies Overview

This document provides lessons on intraday pattern trading. It discusses key terms like "hitting the bids" and "paying the offer". It then analyzes specific stocks like BTU that showed momentum plays, gap ups, and bounces off support and resistance. Simulation examples demonstrate trading weak stocks that fail to hold support. The document stresses the importance of diligent preparation, maintaining a journal, and learning from other traders to improve one's intraday trading.

Uploaded by

collegetradingexchange
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
  • EQUITIES: LESSON FIVE
  • Terms to Know
  • Prep Work
  • Momentum / Breakout Plays
  • Examples: Buy on the Bid vs. Pay the Offer
  • Simulation 1
  • Key Points from Simulation 1
  • Traders Psychology
  • Second Simulation
  • Key Points Simulation 2
  • Analysis, Comments, Questions
  • Week of Simulation and the Week Ahead

EQUITIES:

LESSON FIVE
Intraday Pattern Practice

The Trading Pitt 2010 1


TERMS TO
KNOW:

• “Hit the Bids” – Sell via a market order at the highest price that
you can sell at.
• “Pay the Offer” – Buy via a market order at the lowest ask price
• Bid – Use limits to get filled on the bid price, those willing to
buy.
• Offer – Again use limits to get filled on the ask/offer price, those
who want to sell.
• Reserve Orders – Only show a fraction of your size in market
depth. You can see this when you see prints at the same price
larger than the shown size
• ECN’s – Electronic Communication Networks are the new form
of exchanges that eliminate the specialist model and attempt to
provide direct market access to participants. (ARCA, ISLD,
Hotspot for FX, etc)

The Trading Pitt 2010 2


Finding the best stocks to be in, not just high beta
(beta is a historical and changing reference point)
PREP WORK names.
Better is to find stocks with a high ATR to Price Ratio
STOCK BTU Recent News, Strong Stocks, Understanding the Bigger Picture

AUGUST 3RD,
2010

The Trading Pitt 2010 3


MOMENTUM / BREAKOUT
Going back to BTU: It was able to gap
PLAYS
above resistance and hold above the
Intraday Lows gap after testing twice and no daily
Holding below long time Support resistance until 49
Even if you didn’t get 45.50 paying the
Test of Strong Resistance – 1st Bounce
offer above 46.00 was still a good trade
Above key levels
- Pay the offer
Watch for weakness at resistance hit
out and then rebid with less size at
breakout level

The Trading Pitt 2010 4


• Look at the X chart below.
• Although hindsight is 20/20 X still offered
EXAMPLES several good opportunities at whole
BUY ON THE BID VS. PAY numbers for range trades and then
THE OFFER holding above resistance on a gap up 7/23
• Going forward 45 and 50 will be key levels

• For any range play I prefer to add


liquidity and bid/offer stock at key
price levels
– This improves my overall
trading cost, and risk/reward
on that trade
• Breakout trades I tend to use
market orders to get shares
immediately

The Trading Pitt 2010 5


Stock touches key support for a quick to no bounce
Don’t Fade
SIMULATION 1 SPY’s weaken and the weak stock trades through the level
and holds offer
STOCK: V Stay short until there is a reason to cover
MAY 17TH, 2010

THIS IS A
WEAK STOCK!

The Trading Pitt 2010 6


KEY POINTS Weak Stocks Stay Weak!

FROM Make it a next day play! Where if the market gets weak your
going to sell more of that stock adding below key levels.
SIMULATION 1 Note it gets a little stronger than at the end of the day.

The Trading Pitt 2010 7


TRADERS
PSYCHOLOGY

From an Intraday Educational Foundation posted


on their blog by Mike Bellafiore of SMB Capital

“A solid intraday educational foundation is


obtained by the intraday trader who sustains the
energy to complete these daily acts:
1) Diligent Morning Preparation
2) Keeping a detailed trading journal
3) Visualization Exercises
4) Video review of market patterns
5) Learning from other traders on your desk
6) Tweaking your playbook
7) Maintaining a positive outlook”

The Trading Pitt 2010 8


SECOND Market Gaps Up Overnight because of futures
SIMULATION Leaders pop on the open but fail at premarket highs
Liquidation ensues

JUNE 21ST,
2010

The Trading Pitt 2010 9


KEY POINTS The better play would have been to get
SIMULATION 2 short already weak stocks, rather than the
leaders on a big decliners to advancers day.

The Trading Pitt 2010 10


ANALYSIS, • Analysis of Gaps
COMMENTS,
QUESTIONS?

The Trading Pitt 2010 11


WEEK OF Week ahead watch, how the market
SIMULATION gaps up and try one of the 2 patterns
AND THE we talked about today.
WEEK AHEAD
Week ahead

The Trading Pitt 2010 12

EQUITIES: LESSON FIVE Intraday Pattern Practice The Trading Pitt 2010 1
• “Hit the Bids” – Sell via a market order at the highest price that you can sell at. • “Pay the Offer” – Buy via a market o
PREP WORK STOCK BTU AUGUST 3RD, 2010 Finding the best stocks to be in, not just high beta (beta is a historical and changin
MOMENTUM / BREAKOUT PLAYS Intraday Lows Holding below long time Support Test of Strong Resistance – 1st Bounce Above key leve
EXAMPLES BUY ON THE BID VS. PAY THE OFFER • Look at the X chart below. • Although hindsight is 20/20 X still offered severa
SIMULATION 1 STOCK: V MAY 17TH, 2010 THIS IS A WEAK STOCK! Stock touches key support for a quick to no bounce Don’t Fade SPY
KEY POINTS FROM SIMULATION 1 Weak Stocks Stay Weak! Make it a next day play! Where if the market gets weak your going to s
From an Intraday Educational Foundation posted on their blog by Mike Bellafiore of SMB Capital “A solid intraday educational
SECOND SIMULATION JUNE 21ST, 2010 Market Gaps Up Overnight because of futures Leaders pop on the open but fail at premarket
KEY POINTS SIMULATION 2 The better play would have been to get short already weak stocks, rather than the leaders on a big

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