Intraday Trading Techniques
Transcript of Intraday Trading Techniques
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IntraIntra--D
ayTradingTec
hniques
D
ayTradingTechniques
W
ith
W
ith
Greg
Capra
Greg
Capra
CoCo--FounderofPristine.com,andCo
FounderofPristine.com,andCo--Authorofthebestselling
Authorofthebestsellin
g
book,To
olsandTactics
fortheMasterDayTrader
book,To
olsandTactics
fortheMasterDayTrader
Copyright2001,PristineCapitalHoldings
,Inc.
C
opyright2001,PristineCapitalHoldings
,Inc.
Pristine.comPresen
ts
Pristine.comPresen
ts
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Table
ofContents
Table
ofContent
s
PuttingItTogether
PuttingItTogether
Introduction
Introduction
FourStyleso
fTrading
DayTrading
Defined
Psychologica
lRequirements
TheKeyConcepts
TheKeyConcepts
Candlesticks
Candlesticks
Retracements
Retracements
MovingAverages
MovingAverages
MarketTiming
MarketTiming
Support&Resistance
Support&Resistance
MultipleTim
esFrames
PristineBuy&SellSetup
MovingAverageInterpretation
MovingAverageInterpretation
Candlesticks
Simplified
Candlesticks
Simplified
Foundation
Foundation
Combinin
gFoundationand
Combinin
gFoundationand
KeyConceptsforMastering
KeyConceptsforMastering
Intra
Intra--day
Trading
day
Trading
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Introduction
Introduction
Introduction
Introduction
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FourStylesofTrading
FourStylesofTrading
T
ypesofTrading
T
ypesofTrading
FourStyles
ofTrading:
FourStyles
ofTrading:
Core
Core;;Swing
Swing;;
Guerrilla
Guerrilla;;DayDay
Whichfallinto.
Whichfallinto.
TwoBroad
TradingCategories:
TwoBroad
TradingCategories:Wea
lth
Wea
lth;;Income
Income
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TwoBroadT
radingCat
egories
TwoBroadT
radingCategories
W
ealthTradingStyles
W
ealthTradingStyles
IncomeTradingSty
les
IncomeT
radingSty
les
CoreTrading
CoreTrading
SwingT
rading
SwingTrading
GuerrillaTrading
GuerrillaTrading
DayT
rading
DayT
rading
-WeeklyCharts
-Daily
Charts
-Daily
,60Min.&30
Min.
-HourstoDays
-WeekstoMonths
-DaystoWeeks
-5,15&60-Min.
-MinutestoHours
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Intra
Intra--dayT
radingDefined
dayT
radingDefined
Wha
tisIntra
Wha
tisIntra
--dayTrading?
dayTrading?
1)1)
Astylethatcov
ersaholdingpe
riodofseveralminutestohours
severalminutestohours.
2)2)
Threeformsof
Intra-dayTradin
g:
Scalping
ScalpingM
omentum
M
omentum
3)3)
Thisstyleoftra
dinghasbecomewidelyaccept
edrecently.
4)4)
DayTradersuse5-&15-Min.chartstomake
entriesandexits
.
5)5)
DayTradingis
bestusedonactive,highlyliquidstocks.
6)6)
DayTraderstry
tocapturesmallergainswith
gainswithm
inimaldollarr
isk
m
inimaldollarr
isk.
7)7)
DayTradingis
astyleoftradingthatMaynotbesuitableforALL
MaynotbesuitableforALL!!
Da
y
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Psychologica
lRequirem
ents
PsychologicalTra
dingRequ
irements
PsychologicalTra
dingRequ
irements
Confidence
Patience
Discipline
H
OW
AsystematicobjectiveMeth
odofinterpreta
tionisneeded.
Subjectiveanalysismustbereducedor
eliminated.
Thisbuildsathoughtproc
esswhichbuild
sConfidence.
Patience
Discipline
BecomesYourJob!
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Fo
und
atio
n
Fo
und
atio
n
TheBuildingBlocks
TheBuildingBlocks
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Intra
Intra--day
TradingTools
day
TradingTools
Toolso
fthePristineDayTrader
ToolsofthePristineDayTrader
ChartingTools:
ChartingTools:55--,15,15--&60
&60--Min.In
tra
Min.In
tra--daycharts
daycharts
displayedinCandlestickform.
displayedinCandlestickform.
Colorcodedvolume
.
Colorcodedvolume.
T
echnicalTo
ols:
T
echnicalTo
ols:2020--&200
&200--periodsimplemovin
g
periodsimplemovin
g
average
s.
average
s.
APricePattern:
APricePattern:ThePristineBuy&
SellSetup.
ThePristineBuy&SellSetup.
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Intra
Intra--dayChartin
g
dayChartin
g
2020--PeriodMA
PeriodMA
200200--Pe
riodMA
Pe
riodMA
The15
T
he15--MIN.Ch
art
MIN.Ch
art
Candlesticks
Candlesticks
ColorCodedVo
lume
ColorCodedVo
lume
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PristineCapitalHoldings,Inc.
TheBattlebetweenBullsan
dBears
TheBattlebetweenBullsan
dBears
DeterminingWhoWonTheBattle
DeterminingWhoWonTheBattle
Bea
rsWin
Bea
rsWin
BullsWin
BullsWin
High
High
LowLow
Close
Close
Open
Open
Open
Open
Close
Close
High
High
LowLow
BodyBody
Body
Body
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SimplifiedCandleLan
guage
SimplifiedCandleLan
guage
SixCand
leConcepts
SixCand
leConcepts A
llgivetradersthe
SameMessage.
Theprobabilityofth
e
currenttrendchanging
isincreasing.
Ahighprobability
oppo
rtunitymay
exist
totrade.
BottomingT
ail-BT
ToppingTail-TT
NarrowingRangeBodies-
NRB
NarrowRan
geBodyNR
WideRange
Body-WRB
ChangingoftheGuard-COG
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The
PristineBuyandSellSetup
The
PristineBuyandSellSetup
Pris
tineBuy&
SellSetupF
acts:
Pris
tineBuy&
SellSetupF
acts:
Thesetupcanbetradedinalltimeframes.
Thiscombinationofbarsisasegmentorsmaller
partoftheoverallpattern.
Itisasetofbarsthatoccursinadetailedformation.
Itoffers
highprobabilitywithlowrisk.
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PristineCapitalHoldings,Inc.
The
PristineBuyandSellSetup
The
PristineBuyandSellSetup
SellSetup
SellSetup
BuySetup
BuySetup
Eachnewbaro
pensintheareaofthepriorba
rscloseandalso
closesabove/belowitsopeningp
riceuntilareve
rsalofthatoccurs.
C
lose
Open
Close
Open
Thesetup
iscompleteaftera
reversalcandleha
sformed.
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PristineCapitalHoldings,Inc.
The
PristineBuyandSellSetup
The
PristineBuyandSellSetup
T
hisisNOTwha
twearelookingfor!
Thesebarsoverlapeachotheranddon
othavethe
predictabilityw
earelookingfor.
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PricePatternRecognition
Congestionpatternsarewhippy
andunpredictable.Recognizedby
overlapping
candlesandmultiple
failuresinb
othdirections.
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PristineCapitalHoldings,Inc.
M
ovingAverageGuidelines
M
ovingAverageGuidelines
SimpleMovingAverage
s
Longposition
sarefavoredwhenpricesareAbovetheir20-MAon
a60-Min.chart.Entrypointsarefoundon5-or15-Min.charts.
Longposition
sareconsideredw
henpricesareextendedBelowthe
20-MAona6
0-Min.butAbovetheir20-MAonthe5-Min.chart.
Shortposition
sareconsideredw
henpricesareextendedAbovethe
20-MAona6
0-Min.butBelowtheir20-MAonthe5-Min.chart.
ShortpositionsarefavoredwhenpricesareBelow
their20-MAon
a60-Min.chart.Entrypointsarefoundon5-or15-Mincharts.
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PristineCapitalHoldings,Inc.
MovingAverageGuidelines
MovingAverageGuide
lines
T
he60-MIN.Chart
WhenPricesrise
Abovethe20-M
A.
WhenPricesdecline
Belowthe20-MA
.
LongTermIntra-Day
20-MA
200-MA
FavorShortTrades
FavorLongTr
ades.
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PristineCapitalHoldings,Inc.
M
ovingAve
rageGuide
lines
M
ovingAve
rageGuide
lines
Extended
BearishTrend
Pricesm
ove
above20-MA.
60-Min.Chart
5-M
in.Chart
20-MA
20-MA
200-M
A
200-MA
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Pristine
KeyConce
pts
Pristine
KeyConce
pts
Ca
ndlestic
k
Candlestic
k
C
onc
epts
C
oncepts
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CandlestickConcep
ts
CandlestickConcep
ts
ShortorNarrowingrangec
andlestellusvolatilityislow
ormomentumisdecreasing.
LongorExp
andingrangecandlestellusvo
latilityishigh
ormomentumisincreasing.
Eachcandlewillgiveusinformationthateitherconfirms
orcontradic
tsthattrend.
Askyourself,
Whatdoesthecurrentcandle
tellyouabout
theprevailingtrend?Note:
Atrend=3-5barsmovinginthe
samedirection.
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CandlestickConcepts
CandlestickConcepts
ChangingoftheG
uardBar-COG
ABullishCOGisdefined
asthreeormore
consecutive
redbars
followedbyagreenbar.
PristineTip:
Whiletherearediffe
rentvariations,them
essageisalways
thesame!A
reversalinmomentu
mhasoccurred!
ABearishCOGisdefined
asthreeormore
consecutive
greenbarsfollowedbyaredbar.
Bullis
hCOGs
BearishCOGs
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CandlestickConcepts
CandlestickConcepts
NarrowingRa
ngeBars-N
RB
PristineTip:Whiletherearedifferentvariations,themessageis
alwaysthesame!Aslowinginm
omentumisoccu
rring!
Narrowing
Ran
geBars
Aseriesofbarsinwhichthedifferencebetweenthehighsandlowsis
Narrowing.
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CandlestickConcepts
CandlestickConcepts
N
arrowRangeBodies-N
R
PristineTip:W
hiletherearedif
ferentvariations,themessageis
alwaysthesame!Aslowingin
momentumhaso
ccurred!
B
arsinwhichthebodyofthecandleissmallrelativetotheoveralllength
of
thecandle.They
mayhaveTailso
neithersideofthebody. N
arrowBodies
NarrowBodies
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CandlestickConcepts
CandlestickConcepts
ToppingTailBars-TT
Barsinwhichp
riceshadbeenhigher,thensupplyforcedprices
lowerintothelowerpartofthe
barsrange.
PristineTip:Whiletherearedifferentvariations,themessage
is
alwaysthesame!Distributionhasoccurred!
ToppingTail
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CandlestickConcepts
CandlestickConcepts
B
ottomingTailBars-BT
Barsinwhichp
riceshadbeenlower,thendem
andforcedprices
higherintotheupperpartofthebarsrange.
PristineTip:Whiletherearedifferentvariations,themessage
is
alwaysthesame!Accumulationhasoccurred!
BottomingTail
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CandlestickConcepts
CandlestickConcepts
WideRange
Bar-WRB
A
BarinwhichtheCandleBody
isrelativelywidecomparedtothe
m
ostrecentbars
.
A
WideRangeBa
rafteranexten
dedadvanceor
declinetypically
happensnearthe
endofamove.AnNRorNRB
willsignaltheturn.
A
WideRangeBarafteraperiod
lowvolatilityignitesmomentumin
th
atdirection.
WRBEnds
WRBIgnites
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CandlestickConcepts
CandlestickConcepts D
arkCloudCover
PiercingPattern
BullishEngulfing
BearishEngulfin
g
CounterAttackLines
ThrustingLines
COGs
COGs COG
s
BT
NB
NB
NRB
WRB
WRB
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Candles
tickConcepts
CandlestickConcep
ts
Narrow
RangeBodies&
Bars
Hangman
I
nvertedHammer
ShootingStar
DOJI
Harami
L
ongLeggedDoji
NBs TT
BT
COG
WRB
NBs
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Pristine
KeyConce
pts
Pristine
KeyConce
pts
M
ovingAverage
M
ovingAverage
C
onc
epts
C
onc
epts
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MovingAv
erageConcepts
MovingAv
erageConcepts
TherelationshipbetweenMAsand/or
TherelationshipbetweenMAsand/or
TherelationshipbetweenPriceandMAs
TherelationshipbetweenPriceandMAs
Serv
eas:
Serv
eas:
AnOverboug
ht/OversoldIn
dicator
AnOverboug
ht/OversoldIn
dicator
ARelativeStrengthIndicator
ARelativeStrengthIndicator
ARisk
ARiskRew
ardIndicator
Rew
ardIndicator
ATooltohelpanticipatewhereareversalm
ayoccur
ATooltohelpanticipatewhereareversalmayoccur
AGuidetopriceSupport&Resistance
AGuidetopriceSupport&R
esistance
ABullish/BearishDivergen
ceIndicator
ABullish/BearishDivergen
ceIndicator
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PristineCapitalHoldings,Inc.
MovingAverageConcepts
MovingAverageConcepts
AnO
verbought/
OversoldIndicator
AnO
verbought/
OversoldIndicator
Asthe20
Asthe20--and200
and200--
MAsmovefarther
MAsmovefarther
apart,theodds
ofa
apart,theodds
ofa
reversalincrease.
reversalincrease.
Aspricesmove
Aspricesmove
fartherawayfrom
fartherawayfrom
the20
the20--MAodd
sofa
MAodd
sofa
reversalincrea
se.
reversalincrea
se.
20-MA
2
00-MA
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PristineCapitalHoldings,Inc.
MovingAverageConcepts
MovingAverageConcepts
AMomentumo
rBullish/Be
arishDiverg
enceIndicator
AMomentumo
rBullish/Be
arishDiverg
enceIndicator
ACOGaftera
newhighor
new
lowaccompanied
byasmaller
distancebetween
priceandthe20-
MAsignalsa
slowingin
Momentumanda
Divergence.
NewLowDivergence
COG
200-MA
20-MA
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MovingAv
erageConcepts
MovingAv
erageConcepts
AGuidetoSupp
ort&Resistance
AGuidetoSupp
ort&ResistanceLookingtoth
e
Lookingtoth
eleftleft
ofanMAshould
ofanMAshould
pointtoward
an
pointtoward
an
areaofsupportor
areaofsupportor
resistance.
resistance.
PriceR
esistance
Price
Resistance
200-M
A
Looktothe
Left
Pric
eSupport
2
0-M
AAMovingAvg.is
atoolthathelps
thetrader
anticipatewhere
toenterpositions
ortakeprofits.
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PristineCapitalHoldings,Inc.
MovingAverageConcepts
MovingAverageConcepts
AnticipateEntry/ExitandRisk/R
eward
AnticipateEntry/ExitandRisk/R
eward
Asprices
move
Asprices
move
furtherfr
oman
furtherfroman
MAodds
ofa
MAoddsofa
reversalincrease.
reversalincrease.
RISKis
belowCOG
PotentialRe
ward
Anticipated
Exit
TIP:Thecorrectionfromthe
firstpoin
tofresistance
increasestheoddsthatthis
pointwillbeovercome.
Distance
betweenMAs
Anticipated
Entry
20-MA
200-M
A
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MovingAv
erageConcepts
MovingAv
erageConcepts
A
RelativeStrengthIndica
tor
A
RelativeStrengthIndica
tor
ComparingtheMAs
ofastockorindex
toanotherwilltelluswh
ComparingtheMAs
ofastockorindex
toanotherwilltelluswhichisstronger.
ichisstrong
er.
Wide
Wide
Wide
Wide
N
arrow
N
arrow
200-MA
200-MA
20-MA
20-MA
Stronger
Weaker
Narrow
Narrow
Wide
Wide
Narrow
Narrow
Wide
Wide
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Pristine
KeyConce
pts
Pristine
KeyConce
pts
Retraceme
nt
Retraceme
nt
C
onc
epts
C
onc
epts
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PristineCapitalHoldings,Inc.
RetracementsConcepts
RetracementsConcepts
R
etracementlevelsaloneareno
tenoughtocon
siderenteringa
p
osition.APristinesetupisalso
needed.
T
heRetracemen
tlevelswearec
oncernedwithare40,50and6
0%
T
heRetracemen
tlevelsareape
rcentagemeasu
rementbetween
s
ignificanthighsandlows.
R
etracementlevelsareusedtom
easuretheSTR
ENGTHor
W
EAKNESSofamoveCountertothePrevailingtrend.
L
earntoseeretr
acementlevelswithoutdrawingthem.
W
hentrading,analysismustbe
donequickly.
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LevelsandInterpretations
0 40 5060
100
100
60 5040 0
Aftera40%R
etracement,the
trendisstillconsideredpositive.
Thetrendshouldcontinueintheoriginaldirection.
40
%
40
%