Daytrading the Quick Trade
By Ralph Russell
We have been asked, "Why not make an entry and sit all day with
it?" Our first answer might be something like, "We would
soon have a losing trade to deal with!"
The market normally will oscillate or "jump up and down."
This is caused by one person's bargain point being another person's selling
point. And so the day normally goes up and down with some respect to yesterday's
In trading, I first try to find what appears to be a failure.
The easiest one to see is a high attempt that does not quite reach the
previous high made from a few to several minutes earlier in the day.
I then look for a pivot under which to place a sell stop, or I
look for a level that I see as significant in my experience with the
"Math of the Markets" and utilize
it for an entry.
Buy entry failures are more difficult to deal with as the failure
does not seem as obvious to me. It is when we have made a low, then rally
and come back down toward the low, which sets up a higher low a few minutes
to several minutes between the two lows. I then look for a pivot over
which to place a buy stop or I look for a level that I see as significant
in my experience from the "Math of the Markets" and utilize
it for an entry.
Since we are entering on a stop, the market has confirmed our trade direction
and so far we are 50% correct. This is the reason I see the entry as
the most significant part of any day trade. If the entry happens you
will or should "go into the money" at least for a few seconds.
The next thing we expect is follow through. If we have a failure
behind us in time it must be Wave 2 or Wave B or perhaps a Wave 4. This
means we are expecting Wave 3 or Wave C to follow and both of these waves
are impulsive according to Elliot Wave Experts and commentators.
Now the next issue is profit targets. I see 10 to 30 points as
a good day trade. We have a good profit normally in minutes and we then
contribute to the jumping up and down by trying to exit -- maximizing
our profits/minute. Yes, I I see sitting in the market as a risk that
needs to be minimized, as often price reverses. Many times a nice profit
will be turned into a loss if one hesitates too long.
Once we are out of the trade we can relax, count our profit or
loss, lick our wounds or have the satisfaction of a well executed trade.
We can then evaluate the market objectively and begin to look for
our next trade.
It is for this reason that the NQ service, which I trade, takes so many
trades. Hit and run might be the terminology used to identify what
we are doing. I spend each day looking for an entry that might get me
part of a Wave 3 or a Wave C. Sometimes I enter on Wave 5 and Wave 5 is
the most likely to extend into 5 further waves. This is especially true
if Wave 3 has not extended.
So we trade in and out all day trying to get located in a trade
that will run! If it does not run, many times we will exit with a couple
points or at break even to get rid of the exposure and the risk of
sitting in a market that is congesting. We may miss the trade but in 20
minutes more or less another trade may make its presence known
to us and we can trade again.
Try to catch a move, try to reduce exposure, deal with a brokerage
firm with reasonable commissions and we go at it each day. There are
some days I wish I had not traded, but it goes with the territory.
Since the question came up about so many trades and the short duration
I thought I would comment on it for you. Send any questions
you may have.