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a simple filter for your day trades

In today’s high tech world sometimes the best method is the least complex. I feel very strongly about that when it comes to day trading for a living. It can be easy to get lost in the newest software and the most sophisticated system for sale. There is even software on most platforms that will let you back test your ideas. There is nothing wrong with back testing but don’t fall in to the trapp of optimization and tweak your system to death for the perfect trade.

There is no perfect trade. No matter the system or method you use, you still have to manage the trade after you get in. How you manage a trade for both profit or loss is your real edge in trading and ulitmately how you will earn a consistent living, not the new Intel quad four processor or the 12 monitors you use.

That being said there are patterns that you can use to put yourself in the best position for profitability. One of the most consistent edges we have founs is yesterdays high and low. These areas represent the extreme buyers and sellers were able to push a stock the day before.

When you cycle through your list every day you should decide to make a tradde in those stocks outside of yesterdays range first. Why> The anser is simple, if a stock is trading inside of yesterdays high and low there is no new order flow in that stock today and therefore not a big edge.

Can you make a day trade inside of yesterdays range? Yes of course but ask your self “is that the best trade available?” Is there a better edge than this scenario? Go back over your charts and take a look at the follow through that stocks exhibit once they clear yesterdays range, I think you will be pleasantly surprised that this simple filter will add quite a bit of money to your bottom line.

http://keystonetradinggroup.com/

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