Could you tell me how I can use your advice to the best advantage since: I have a full time job and cannot do day trading. I usually review info in the morning before I go to work and can make trades then. Most of your advice however, is based on the stock getting to a certain price and with a certain volume. Is there a way I can place trades in advance based on that criteria?
I am not a day trader either, though I do day trade the indexes daily sometimes. What I try to stress (and am not doing a good enough job at) is that using the methods where you let the stock break out of a pattern or above a definite resistance point allows you to enter positions with more confidence and without having to be watching the market all of the time. The idea is to let the stock prove to us it has the strength to warrant investing in. This is the method I developed while working full time in a law office where my life was spent in 6-minute increments, working 16-hour days. I did not have internet access, would be in court, or otherwise indisposed. So, I had to come up with another plan of action.
What I would do (and still do) is come up with a game plan the night before or the morning of the session. I would get together a sheet of my most important information: key points on the indexes for support and resistance; the stocks I was interested in; the key details about those stocks (pivot point; support; resistance; average volume; target volume; options I wanted (if any). I used a full service broker, and I used an online broker as well. When I was buying a breakout stock, I would often enter a buy order at the pivot price; not the full position, but part of it. When I had a break, I would call in and see if it was executed (you can get a page now). Otherwise, I would call the full service broker in the first hour on a break, and have my sheet there to let me know at the moment if things were on track. I would check over lunch to see what was going on. Later in the session (last hour), I would call the full service broker and see how things were going then. If my stocks were moving as anticipated, holding over the breakout on good volume, etc., I would add to the position taken earlier in the session. Now that I could not do that over the internet; I had to do it with Schwab, Ameritrade, Smith Barney. Still, even when I could not check in later that session, if the stock performed well and I wanted more shares, I could enter another order to buy shares the following session, keeping in mind I did not want to chase shares too far.
It is important to remember that the volume figures are not absolute guidelines. If it is off a bit that does not break a play. A breakout or breakdown on strong volume is what we want, but we won’t know the final tally until it is a final tally. We try to pick good patterns that give good entry points if the price is broken. We will buy on those moves; we then check to see if volume is there, either that afternoon or that night. If it was not, we know that the move was not that strong and could come back on us; we set stops loss points closer to avoid a reversal on us as the buyers just were not there in masse on the breakout. If you have access to a pager, the alert service sends you the data on the stock as the move is made, and as discussed below, helps take much of the uncertainty out of the process.
