I mentioned earlier that it may take one day with gap up but close red to start the down trend. Let's see if that is the case.
It's still too dangerous to hold FAZ overnight. Most of the preferred shares are green today. Chances are, this is another "healthy pull-back" of financial stocks. However, there's limited room for a lot of financial giants like JPM and WFC. In this case, I'd rather stand on the sideline and only do daytrading when there's good entry point.
I daytraded FAZ and bought some "junk stocks" OCNF and ARRY.
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Hey Max,
ReplyDeleteI need help on curbing large number of trades that I need to make when I am day trading. How many trades do you do in a day? How do you decide and how quickly you act on your decision? How do you decide that its time to exit? What is the level of drawdown do you give yourself as a cushion for a trade?
Many thanks.
Sami.
Max, Whats up?
ReplyDeletewhen I do daytrade, I made no more than 3 round-trip per day actually. I usually look for previous day's overbought/oversold situation to determine if I should go long or short. Once I decided that, I will look for good entry point. Setting a stop is so critical. I usually don't have time to look at the market very closely so I used to set the stop very tight, and I got stoped out almost right at the bottom for several times. Now I usually set a wider stop and decided to trade less frequently (only one round-trip per day). For FAS/FAZ, I like to set it at -5% to -8%. It's been working better than before. And it's more relaxing trading this way. I hardly have to pay much attention to it except moving up the stop as it goes up.
ReplyDeleteFor FAS/FAZ pair, I found that they tend to have very clear trend intraday. They seldom do intraday reversals. Once the market tone is set, it almost always go one-way. (of course it could be flat all day). This morning at 11 am when I took a look at the market, it was quite clear the bear is done. I didn't have the time to clear FAZ and load FAS, too bad.
If the market goes my way and I have time, I usually pay attention to possible reversal during 3pm - 3:30 pm. I usually tighten up stops a bit.
If the market goes trendless, I would look for exit points. I dont' like to gamble this way.
For FAS/FAZ pair, if I can get 8% gain, I would take profit. It's good enough for day-trade.