Here is a concise summary of how we trade:
Wait for solid patterns to develop on the daily chart and then add an alert in your platform. Next day, watch the stock for a good intraday pattern (very similar to the type of pattern one would look for on a daily chart, just on the intraday level) and high volume. If both conditions are met, then pull the trigger. If neither condition is met, pass.
But what if only one condition is met? Probably the biggest mistake we make as a group (and some of us are more guilty than others, but all three have to work on this) is that we simply pass on trades too often. We always want our stock to set-up in some good-looking pattern, be it a consolidation pattern, a semi-circle, always a pattern with some kind of symmetry. At least a few times a week one of our stocks hits our number with no real pattern, BUT with strong volume. More often than not we pass on the trade and the stock ultimately moves in the intended direction. This seems to be a constant source of loss of opportunity.
Volume trumps Aesthetics. This means that if your stock hits your number with high-volume, but has no clear intraday pattern, it probably is still best to trust the number, and give it a shot (caveat -- we are NOT talking about buying on top of a vertical spike, that will always be a No-No). We know this but for some reason we're very slow to act accordingly -- probably not because it's a habit that results in losses, but rather something that holds us back from greater profits, and since we do well enough with the current way of trading, we just can't get motivated enough to change this bias.
The inverse, by the way, meaning a pretty set-up but with low volume, is still an avoid with the only possible exception being the thin stock whose volume comes in after the actual break...but that's still a roll of the dice.
As a first step to modify our bad habit we have printed a sign for the office:
High Volume + Daily Number = Profits
Let's see if it works.
10 Midweek PM Reads
2 hours ago