Trading Notes: Analysis of a Day Trade




Why Did I Resort to Day Trading?




Day Trading can be extremely risky to the uninitiated. Trade at your own risk!

Having said that, I have been trading for more than 10 years, but had resisted the temptation to day trade because of the risky nature of this type of trading.

It was only this year, given the extreme volatility of the markets under the current administration, that I decided that it was worthy of getting into, since this very volatility had caused my portfolio to tank. And I’m confident that eventually the portfolio will rebound, but until then I will day trade to earn extra cash to help boost the portfolio.




Let’s Look at Micron

Micron (MU)
finviz dynamic chart for  MU

Analysis of a Day Trade

Looking at the chart above, I wouldn’t invest in Micron for the long term. But, the daily volatility of the stock makes it a good candidate for day trading, in my humble opinion.

If a stock has fluctuations of 25 cents or more, then to me that’s a good candidate for day trading.

Below I’ll explain my process in analyzing this trade.

Screen Shot 2018-11-16 at 6.04.52 PM

Adaptation, Improvisation…

Playing jazz music and day trading are pretty similar, in that decisions are made quickly in real-time. Meaning, both activities are very improvisational. And you need fairly fast reactions to take appropriate action, so to speak.

Yesterday’s trade of MU was done between 7:15 and 7:30am. I wouldn’t say this is the prime time to day trade this stock. As someone who is new to day trading, I resisted the temptation to trade in the first 10 minutes after the opening bell. To me this can be risky and you want to eliminate your chances to take risks that could be disastrous. So, my current strategy is to wait until after 7am (PST) when the dust settles. That way, I can see any potentially established patterns.

Examining The Pattern

The 2 circles in the chart are what i’m looking for.

1. A crossover point in the MACD indicator. this is the trade signal.

2. And i’m looking at the ElliotOscillator for a low point below zero but a sudden change upward that coincides with the MACD crossover.

3. At the very bottom is the RSI indicator. If high it means the stock is overbought. if low the stock is oversold. so i look for a point near the bottom, which signals a potential rebound.

4. I also rely on the Ichimoku Cloud pattern, which shows a green cloud in the main part.

5. Lastly, at the very bottom along with the RSI indicator is the average volume. It looks like we had pretty decent volume and most of that were green bars, indicating more buying than selling. I also look at the overall volume (not shown). As an example, if the stock is showing more than a million trading volume in the first half hour of the trading day, that’s a good indicator that the stock is good to day trade. You always want lots of trading volume in a stock.

Riding the Wave and Exit Strategy

And I ride the uptrend to the point where there appears to be resistance. this is the part that i need to improve on, because during another trade i sold too early and could’ve more than doubled my profits. but, i’m being extra cautious and sticking to my entry and exit strategy.

The drops can occur faster than the climbs, and that’s happened to me before. but my plan B is to hold onto the stock overnight and i usually profit the next day.

In the end, I try to make things as simple as possible. I try to keep a calm composure.

Panic and anxiety is what you don’t want, so it’s important to keep the overall experience a pleasant one, and stay focused on the task at hand.

Disclaimer: The content provided here is for information and entertainment purposes only. It is not intended as an offer or solicitation to purchase any investment. And this material should not be taken as investment advice, since investors’ needs and strategies may vary. Investing in equities is subject to extreme volatility.
Trade at your own risk.

More Investing Thoughts

Stock Trading
Tuesday December 4, 2018 by Carlos Rull
Filed as: Money, Trading Notes
Trading Setup
Monday December 3, 2018 by Carlos Rull
Filed as: Money, Trading Notes
trading setup
Monday November 26, 2018 by Carlos Rull
Filed as: Day Trading
Trading Setup
Sunday November 25, 2018 by Carlos Rull
Filed as: Money, Trading Notes
Day Trading Setup
Saturday November 24, 2018 by Carlos Rull
Filed as: Money, Trading Notes




Comments

comments

Carlos Rull

Carlos Rull is a musician living in the San Diego area. His interests include Yoga, Eastern Philosophy, Zen Buddhism, and Gardening. He plays drums, piano, and composes New Age & Ambient music, and his albums are available on iTunes and Amazon.com.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.