The real "secret" to trading intra day moves | stockbee


The real "secret" to trading intra day moves

On a daily basis big moves in stocks are precipitated by news. Often stocks will make 8 to 20% or more move in a day based on news.  If you systematically track news and know how it is likely to affect a stock you can find many profitable breakouts early in the morning.
What should you track:
Patient Fisherman earnings movers: He compiles a list of after hours movers in convenient easy to use format from various places. The skill required here is the ability to decide before open what % move a stock is likely to make based on such move and entering quickly if you see a big potential mover. : Track all news released from 4 pm onwards. Skill required here is the ability to interpret how that news will move the stock next day. News about earnings, Govt Policy changes, new products, guidance, analyst upgrade and downgrade tends to be market moving.
Earnings Whisper Email: This gives you list of stock with earnings guidance.
IBD highlighted Stock: Due to large subscriber base the highlighted stocks in various section can make big moves.
Top 20 sector Stocks: If you don't know which sectors are leading or lagging the market you should seriously ask yourself what are you doing. People spend more time counting the hair on James Crammer's head than doing thing which can make them money. 
Top1% stock by momentum: Stocks with momentum are the stocks in play currently. They tend to have bigger moves than any other stocks. If you can not name top 10 to 20 stocks by momentum, you are not really serious about your trading.
From these lists and sources once you generate ideas it is your ability to determine which stock is likely to make big move out of this that is important. That is a skill which you will develop over time if you do this over a period of months. At first it will be overwhelming but slowly you would start getting it. You will understand how earnings, guidance, or analyst action moves stocks.
Once you understand that then you need skill to enter and exit quickly. Many of the news plays involve entering as early as possible. Entry in many of these is easy part, the ability to exit profitably is also key. For most news plays if you can determine profit target it is easy. It allows you to exit at your target. Again this is a skill area and you will develop the skill over multiple trades.
How much to risk on such news plays is also critical. Often such news plays can make 8% to 20% moves in a day. So your risk should vary according to potential. If you see a 20% potential play and then do not risk sufficient amount on it, then it is waste of opportunity.
To develop such a kind of skill to play news is not an easy thing. It requires daily focus and persistence. If you are one of those who is waiting for someone to provide these kind of plays on golden platter and also tell you how to enter and exit and how much to risk while someone is polishing your Ferrari and some scantily clad women are waxing your ear hairs, then you have no idea how short term trading works. And no business  trying it.
Short term trading on intra day basis is about procedural memory. Procedural memories are memories about how to do things. Procedural memory work on principle of automaticity. When you develop a skill in such areas the task is automated and brain can perform the task without cognitive overload.
If you want to see procedural memory at work, observe Tumblers trades (Tumbler is a member of who posts his intra day trades daily in real time on members site). What he does is he plays news on intra day basis very successfully. How does he do it, he has a set procedure for doing his analysis, entry, exit, risk management and so on. Once he gets going he is not conscious of what he is doing. That is why when people ask him question , he may not be able to tell you what made him enter or exit a trade. Procedural memory is very difficult to verbalise. Those who can do things are not necessarily able to verbalise the steps or thinking that is going through their mind when performing that procedure.
Procedural memory skill involved in intraday trading is highly refined skill. It is a complex skill which involves processing hundred  or more factors in a flash of a second. Procedural memory skills are difficult to transfer from one person to another unless the other person is highly motivated and persistent. There is a transfer loss when trying to explain the skill. There are hundreds  of nuances involved in such skills.
The way to develop procedural skills is through extensive practice. Over repeated practice the skill becomes a procedural memory. And you must also practice the correct method. Unless you understand the concept of procedural memory well, you should not attempt short term trading. 
Most people are frustrated in their trading because they do things that hinder procedural memory development. They flirt from one method to another, they follow distinct styles simultaneously, they are not methodical, they seek excitement, they have unrealistic expectations and so on. If you are very good it will take you around six months to master a complex procedural memory task with all out effort. If you are slacker probably it will take you few years. You have to ask yourself that question , do I have that kind of commitment to persist in this effort.
There are hundreds of newsletters and sites which will promise you easy way to make money or some secret which you can learn and then buy a Caribbean island. You can believe all that hype but that is not the real secret to trading success. The real secret to trading successfully is about developing procedural memory. And there are very few shortcuts to developing procedural memory.Show me any site or newsletter which exclusively focuses on procedural memory. 
If you want to be successful trader first learn how procedural memory works.

Procedural Memory related posts:

Understanding procedural memory

The little secret to trading success

The Dreyfus model of skill acquisition and developing trading expertise

Think methods

Waiting for Moses to give you trading commandments

How to develop trading expertise

How to learn to trade profitably 

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The Banker said...

I understood everything except for the fact that I don't know top 1% of stocks by momentum. Is that available through your membership? Or how do I spot these.

I've been focusing on stocks breaking out on price increase of 2% or more with 100% increase in volume.

Would that be the same thing?

Pradeep Bonde said...

If you are using Telechart you can sort stock by 30 Day Price trend vs market and look at top 20 to 30 stocks.