The Closing Print live trading and financial blog during market hours.

Are you a day trader, swing trader or income trader? No matter what style of trader you are, knowing which strategy to use is critical to your success. In addition, understanding your goals, targets, and the amount you can afford to lose prior to taking on a new position is crucial.

Do you know what to look for when you enter a new position? Does your candidate match your plan, your temperament, and your goals?

If you unintentionally enter a day trade setup, planning to swing, you could be setting yourself up for failure. Conversely, if you intend to swing trade and take profits too soon, you could be very disappointed when the stock continues on without any hint of slowing.

The 9ema Rule for Day Traders

Would you rather be in and out of the market quickly, preferring to enter and exit during the first hour or two? Well, the 9ema rule solves this issue by identifying the presence of buyers and sellers. Auction activity sets the stage for quick breakouts and follow-through, once a trader is in a position. Flags identify potential continuation, also set up zones for trailing stops to lock in gains.

Context. The markets in August 2017 are volatile. The indices have seen 2% down days and gaps back up to highs. In this environment we scale out prior to the volatility by watching divergences in advance decline and new highs, new lows changes. We also shift to shorter holding periods.

BZUN Example – Day Trade – Out by the Closing Bell

We want to be in and out of the market before the close, so we watch for flags and activity that confirm our entries and exits. Entry was straight forward using the ABCD pattern that we reference in the LIVE broadcasts during market hours. We call this the Trade of the Day setup (ToD).

ABCD or Trade of the Day setup

“A” represents the entire morning move into lunch. Several flags found buyers at the ascending 9ema.

“B” respresents closes below the 20ema during the morning session. These would stop out a new scalp or day trade position; there were no stops. Stops did not trigger until noon.

BZUN 5 minute

Once the intraday low can be confirmed, price starts to move higher again. This represents point “C” a higher low as price moves back above the 9/20ema. We usually take 1/2 off a winning position and swing the remainder when the market is trending.

BZUN KEM Day Trades

The ABCD completed with “D”. Price reached the high of the day, with some profit taking indicating we might see a repeat in the next trading session. Using this method of entry, while trailing your stops higher, might allow for a swing, should conditions warrant.

Do you know what to look for?

The 9ema Rule for Swing Traders

Swing traders rely on trends, so if that’s your forte, you’re probably not a fan of a morning or evening scalp. Using the 9ema rule will help you identify your intial entry and whether or not a swing is feasible.

Since swing traders rely on trends and fundamentals, as well as the overall market and sector strength to determine when to exit, the current environment is somewhat risky. That said, the ABCD pattern works on swing trades as well. Use the 9/20ema as your entry and stop.

BZUN Example – Swing Trade

Note previous occurences where BZUN first broke out of consolidation patterns. The stock pushed higher for several days. We are anticipating this will occur again and will use the (ToD) setup until we get stopped intraday or on any new swings on the daily time frame.

BZUN suggests higher prices in store as RSI rises, stochastic and MACD turns and tight Bollinger Bands begin to expand.

BZUN daily 08-16-2017

Your strategy should tell you when to enter when to take profits, and your strategy should also tell you when you are wrong.

BZUN Weekly shows a stock that is building a following. In the past few months volume is picking up, indicating institutions are involved.

BZUN Weekly

Between each consolidation, the stock travels higher for a couple of weeks, at a minimum. Given the new breakout, it is possible that we see a repeat if this scenario outlined above.

Note: We have been in and out of BZUN in the trading room since June, with profits along the way.

Whether you are a day, swing, position or income trader, we can help you develop your skills, while finding winning stock picks along the way.

Come trade with us LIVE everyday at The Closing Print.

Happy Thursday,

Vinny



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