3)
Watch the Intraday charts. ALmost all brokerage platforms will show intraday charts for every single stock, including pinks. When the various indicators (like MACD, RSI, Stochastics etc) are peaking to overbought levels, it will almost always drop in the next few minutes to correct and then potentially move up. This is not ALWAYS true, but true for the most part. As an e.g. watch SGLS, the RSI is pegged at 81 right now. Assuming the chart patterns hold true..it should drop in the next few minutes, even if it has to move up after that”

Good luck!

I feel that it is futile to try and predict exactly where the market is going. We can find trends and make good guesses, but, in the end it seems too random. In the past few days I have been reading some articles that suggest what separates a good trader from a bad trader is the psychology.

Many people suggest that a good trader does not try and find the bottoms or tops, rather, they focus on finding the reversal of a trend.

I have tried to apply this to what I know and I might have made an interesting discovery.

In the past, I have looked for a good entry point based on where the bottom might be. This doesn’t seem to work well. So instead, I think that an entry point should be where the new trend becomes confirmed. For instance, say I see a doji at the bottom of a 4 day down trend. I look at the stock and see it was just retracing a previous reaction rally. A little further research indicates that this stock is channeling in an uptrend for the past 4 weeks. I look at the macro level and see the stock is in a greater uptrend. I look at the sector and see that the sector is doing well.

Here is my new strategy.

So I did my homework on the stock and now its action time! The bell rings, the races are off. Since I have been looking at intraday charts, I know that around 10-10:30 is when a stock will usually bottom out and begin its climb back up. I check carefully that the price at that time is not too low and that there is support. Once I find that, I get in and watch. If I was right, I should see the increase up through 11:00 and a leveling off around 12.

If the stock made it back to the open and above, it should be looking good. If there wasn’t enough buying pressure to get it up and over, I would be cautious. volume can be fairly light in the afternoon up until about 2 or 3. At that point, I might see some increased volume and this is where my second confirmation comes from. Although, I have to be careful because often times the short sellers will sell into the EOD buying. I can assume that there will be limited short selling in this case, though. The uptrend of the stock tells me that it would be fairly foolish to sell short unless there was some news that could reverse the entire up trend.

Bad news is entirely possible, though. I realize that tomorrow can bring a catastrophic loss. Maybe a cargo ship will tank, or a factory will go on strike. These are the random events that make the market inherently risky. I couldn’t have foreseen this coming. The company was doing great and had mostly good news over the past few months. It is just bad luck.

So the stock dips a full dollar and I lose 1k. Great…

Or… maybe that never happened. Maybe I keep watching it for momentum. When I see the uptrend start to slow down, I get out with a nice profit.

Whatever the case is, I think the best option is to get in after the trend is confirmed and not try to predict the bottom or top.