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Thursday, September 4, 2014

Basic Trading Technique Tip #1: MTRX Day Trade

Whenever stock is down over 10, 20 or 30% , first thing investor think it should be easy to make 1-2% on such a weak. But sometime stocks that is down 10% goes further lower and end up 20% down at the close. As a day trader we focus on right entry and right exit point. Below I will be sharing very basic trading technique that's easy to understand.

This was the trade that was executed after market open.

Whats so special about this entry ?

Step 1: Decide the stock to trade. In this example I'll explain MTRX trade.

MTRX : missed earning and guided low and so it Gapped lower.

MTRX chart at the open
Step 2: Draw a horizontal line at the lower low of the bar as shown in the chart below and check if the next bar can cross the lower low level. If yes thats the right enty and if no then continue drawing line as shown in step 3.

Step 3:  Continue drawing horizontal line till the stock crosses the lower low level

Step 4:  At some point stock will find support and it will cross the lower low level which is Tweezer bottom and perfect entry point. Remember the moto is "Make small gain and move on" as shown in the chart below. The horizontal line becomes new support and resistance for the stock.

Look for Tweezer top for reversal and Tweezer bottom for reversal bounce play.

Another Example of today's SPY chart:

I hope this simple technique will be useful. Join us to learn more such simple technique which works.

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