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5 minutes Candlestick Chart
What do you notice about recent market conditions? Zig Zag up and down? No obvious trend? It is a difficult market. If you have to play in such a market, I'd advice on trading a rebound from the moving averages rather than trading the pullback. This trade which lasted for 20 minutes made $180 in profit.
5 minute Candlestick Chart
Hi,
The market is in an undecisive mood again. Although the moving averages are sloping slightly upwards, there is no real trend. In order to confirm this, look at the 15 minutes chart below. You will notice that price is range-bound in a horizontal channel. It might appear that price might breakout the channel once it hits the boundaries. But, really, it is just moving in an erractic fashion without any clear direction. Another tell-tale sign that price is not trending is to look at the stochastics and MACD. You will realize that they have poor symmetry, reflecting the irratic price movements.
15 minute Candlestick chart
Types of Orders
Placing orders is an art in itself. Beginners often do not know when to use market orders and limit orders. Different orders are used in different market conditions. But the limit order is the one that is most versatile. Understanding a limit order is essential to your trading success. I will only discuss the case for buying, the reasoning and mechanism is the same for shorting.
Market Order
In a market order, you are basically giving instructions to your broker to buy at the prevailing price. You cannot set what price you want to buy. Market orders might be prone to slippage in fast moving markets. For example, if you give a market order to buy 10 lots, 3 lots might be filled at $10, another 3 lots at $10.50 and the remaining 4 lots at $11.00. We usually use a market order when we need to get in or out of a market fast, such as when the market suddenly moves against you drastically.
Limit Order
A limit order is different from a market order in that you can specify the price at which you want to buy. For example, if you specify you want to buy 2 lots at $10, you will not get a fill at prices above $10. Hence a possible scenario is you get both 2 lots at $10, or 1 lot each at $10 and $9.50. The beauty for the limit order is that you will not get a fill unless the price is better than what you specified.
Stop Order
A stop order is better known as a stop loss order . In day trading stop loss is essential to your survivor. Some traders do not set a stop loss because they are monitoring their trades real-time. They feel that they can step in fast enough to close the position when the situation goes against them. However, in fast moving markets, you can very well lose $200 or more on a single contract in a matter of minutes. Setting a stop loss order removes the psychological hesitation to exit a position. From my experience, this is an absolute requirement, please master it and use it to your advantage.
Assume you are currently long at $10 and you set the stop loss at $8, you are giving instructions to your broker to sell at market price when the price falls down to $8. When the price is above $8, the stop loss order lays dormant, it will turn into a market order only when the price hits $8 to save you from further losses. Note that a stop loss order is always used to exit a position. Hence if you are long, the stop loss order will give instructions to sell. If you are short, the stop loss order will give instructions to buy.
Stop Limit Order
A stop limit order is similar to a stop loss order, except that it will turn into a limit order at the predetermined price. For example, assume you are long at $10 and you set a stop limit order to sell at $8, when price falls to $8, the order will become a limit order at $8. Recall that limit order will assure you of a fill better than the price you specified. Hence, a limit order at $8 means that you get a fill at $8 and above.
Michael Taylor is a professional trader and webmaster of www.daytradeemini.com He regular updates his trading blog at www.daytradeemini.com/blog with educational articles and trading records.
The market has been very flat recently, if you are not careful, you might just lose it big. Although the market is generally ranging, there is still a slight downward bias and it only make sense if you go short instead of long. Going long is much too risky for the reward that you can get.
This trade starts are around 1340 to 1420, a full 40 minutes trade. Basically, I had the benefit of hindsight from the movement in the morning markets. If you study the charts carefully, you will realize that NQ is moving up and down in a zig-zag manner but moving slightly lower each time. This is what I mean by downward bias. The decision to enter the trade came at 1340 when there was a huge red candle downwards. From experience, price usually have big movements at around 1400, I decided to take the risk. stop loss was set at 1671. Quite a tight stop loss as I was not prepared to lose big on this trade.
Hi, how's your trading with the FOMC announcements?
Market did not move as expected after the annoucement with only a 10 point spike down at 14:20 and price immediately spiked up. I managed to capture the downward move by shorting 2 contracts which resulted in $370 of profits. The upward spike was unexpected and I decided to stay out of the market.
At around 1530, price started to move down again... I decided to take my chance by shorting 1 contract and placed my stop loss at 1727. I was prepared to exit if market turned against me all of a sudden. At 1716, I shorted another contract and hoped for price to go down further. My original price target was at 1705, but I moved it further to 1698, after price spiked down sharply. Another $1200 in profits.