Expanding Trade Ideas

This can be a very difficult time to trade if you are not selective and follow your plans using all the tools to make an informed trade decision. As stated in the previous post. The SPY is at a critical area (near 113.00-113.20) of resistance. For the past three to four month the sellers have been able to hold the market at bay around these levels.

What I wanted to talk about was developing trade ideas that don’t just last or play themselves out over one signal trading day; but developing trade ideas that can play out for days possibly even weeks. When trying to develop these trade ideas search for stocks that have sufficient room to move and trade against profit targets. Using multiple time frames you will be able to identify which stocks have good order flow and good potential profit targets.

This is important because trade scenarios need to have good distance profit targets so the risk is commiserate with the reward. Having a strong risk/reward will help you stay in trades longer and build confidence in your ideas. Once you have identified the trend you will be able to focus your trade scenarios in that direction of the order flow by focusing on the pullbacks as opportunity to initiate trades in the direction of the higher time frames.

When I first started trading I would look for stocks that fit my immediate trading plans and would develop scenarios that I expected to play out within the a few days; Instead of looking out a week or two projecting where the stock could be trade do to the underline order flow reading. And then only looking for trades in the direction of the determined order flow.

  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: