Estimated Duration: 1 Day

Notes: You should know how to find Day Trades after this lesson

Understanding how to find Day Trades using our system.

This lesson will help you better understand how to find Day Trades after Day Trading Triggers have occurred. If you do not already understand when Day Trading Triggers occur, please go to the lesson titled "Finding Day Trading Triggers" now and re-read the entire lesson. You should have a basic understanding of that lesson before you proceed.

Day Trading Triggers occur at various times. Whenever a trading trigger occurs, we need to find stocks to trade. Remember this set of rules from the previous lesson:

We first must know when to trade

We then need to know what to trade

We then need trading plans for those trades.

And finally we need to execute our trades.

And remember that....

We tell you when to trade

We tell you what to trade

We give you trading plans for those trades.

But you need to execute your own trades.

In the last lesson we learned when to trade. Now we'll learn what to trade, and we'll learn how to find trading plans.

Let's reference these Parameters for examples in this lesson:

Initial intraday trading parameters for the NASDAQ exist between 1900 - 1928

If 1900 breaks lower expect 1890

If 1928 breaks higher expect 1949

Otherwise expect 1900 - 1928 to hold

Before you begin looking for specific trading ideas you need to know a few things:

Do you want a Day Trade, a Swing Trading, or a Long Term Trade?

Do you want a Long (to buy a stock) or a Short (to short a stock)?

Do you want to do this at Support, Resistance, or All Inflections (both)?

Let's take each of these 1 at a time:

We should know if we want to Day Trade, Swing Trade, or Invest in longer term ideas before we go into the trading day. In addition, we should only be referencing the Parameters for that Trading Style to know when to engage said trades. For example, if we are Day Trading, we should only look at the Day Trading Parameters. This should be somewhat obvious. For the purposes of this lesson we will reference Day Trades.

We should know if we want to buy or to short the stock based on the Trading Triggers that occur. We should always be willing to do either. For example, because the Triggers tell us to Buy near Support and Target resistance when Support is tested, if the Market was testing Support, then we would be looking for a Long Position. Here are a few key points for long or short ideas: We only want Long Positions when the Market tests support, or when it breaks resistance. We only want short ideas when the market tests resistance or breaks support.

When the Market is testing a support level for the first time, whether it be initial or secondary support, we want to choose 'near support.' If the Market is testing a resistance level for the first time, whether it be initial or secondary resistance, we want to choose 'near resistance.' At all other times we want to choose 'all inflections.' Hint: we will only choose 'near support' or 'near resistance' on the first trade that occurs in a new trading effort. This means that after we close one trading effort because our target was reached, for example, and we start a new one, the 'near support' and 'near resistance' options come into play again.

When we know this information we can proceed to finding actual trading ideas.

We find all of our trading ideas through the Focus List. The Focus List is comprised of companies that we feel will best react to the Market when the Market begins to move, up or down. From this list we conduct a 3-Tier Technical Analysis of each stock in that list and we use that analysis to determine which stocks are best correlating with the Market when the market is offering trading signals. This may seem complicated, but think of it this way for example: we compare the technical analysis for the stocks to the technical analysis of the market to find the stocks which are trading closest to their support levels when the Market is trading near its support level.

When a Trading Trigger occurs we need to go to the Focus List and Filter the List for Trading Ideas. Click here to view the FOCUS LIST

After filtering that list using the 3 points referenced above we will find trading ideas.

Let's use an example: We are looking at the Day Trading Parameters. The Market is trading near support parameter (near 1900 from the Parameters above) and a support trigger occurs. This tells us to filter the Focus List for Long Day Trades Near Support. Our Trading Plan should be to buy near 1900, target 1928. When we do so we get these results:

Long Day Trading Ideas Near Support

DISH Buy near 28.92, target 29.32, Stop Loss @ 28.72 (Support Plan)

JPM Buy near 34.52, target 34.76, Stop Loss @ 34.32 (Support Plan)

AMGN Buy near 59.73, target 60.30, Stop Loss @ 59.53 (Support Plan)

IACI Buy near 21.77, target 22.36, Stop Loss @ 21.57 (Support Plan)

ASKJ Buy near 27.17, target 28.02, Stop Loss @ 26.97 (Support Plan)

COF Buy near 73.34, target 74.37, Stop Loss @ 73.14 (Support Plan)

BIIB Buy near 35.85, target 36.71, Stop Loss @ 35.65 (Support Plan)

JNJ Buy near 68.23, target 68.95, Stop Loss @ 68.03 (Support Plan)

C Buy near 46.02, target 46.80, Stop Loss @ 45.82 (Support Plan)

The resulting list will be ordered based on which stocks are trading nearest to their respective support levels at the time we filter the list (if we filtered for resistance it would sort the list based on which were trading closest to their respective resistance levels).

Here are a couple key points:

The Focus List is dynamic so it matters when you filter the list.

ONLY Filter the Focus List when a trading trigger occurs.

If you filter the list at another time you will not achieve Market timing.

Really these are repeats of the same point:

ONLY FILTER THE FOCUS LIST FOR TRADING IDEAS WHEN A TRADING TRIGGER OCCURS.

This allows you to achieve correlating Market Timing.

Once you have the filtered list, review the first few stocks on the list to determine which ones look best to you for trading.

You should have a general idea about the news for the stocks on this list because they are finite. You can review the current list by clicking the Focus List link above. You will also be alerted to any changes in that list. Simply review the news items for those stocks every morning and use that information to help you determine which of the first few stocks on the list look best to trade. Always start with the first stock and work your way down.

In our example we should start with DISH. Unless there was a reason NOT to trade DISH we should choose DISH to trade. If DISH didn't look good to us, we'd review JPM, and so on. The review process should be instant because we should already be familiar with these stocks because they are part of our finite list.

Let's assume, continuing with this example, that 1900 broke lower. In this case we'd have to find a short for balance. We'd do so by filtering the Focus List for Short Day Trading Ideas near all inflections. This is what we might get:

Short Day Trading Ideas Near Inflection

COF Short near 73.34, target 72.47, Stop Loss @ 73.54 (Support Plan)

XLNX Short near 28.87, target 28.14, Stop Loss @ 29.07 (Resistance Plan)

DISH Short near 28.92, target 28.48, Stop Loss @ 29.12 (Support Plan)

CSCO Short near 17.26, target 15.45, Stop Loss @ 17.46 (Support Plan)

JPM Short near 34.52, target 34.17, Stop Loss @ 34.72 (Support Plan)

INTC Short near 22.38, target 17.05, Stop Loss @ 22.58 (Resistance Plan)

ERTS Short near 50.43, target 46.45, Stop Loss @ 50.63 (Support Plan)

RHAT Short near 10.70, target 9.88, Stop Loss @ 10.9 (Resistance Plan)

FLEX Short near 10.60, target n/a, Stop Loss @ 10.8 (Support Plan)

Again, we'd look at the first few stocks on the list to consider a short.

Note the following:

We cannot choose DISH again because we already have it as part of the trading group.

We should look for a stock with a similar price as DISH if we can because this trade is meant for balance.

The First stock on the list is COF. This may be fine to trade, but because XLNX is so similar to DISH in terms of price, it looks more attractive for balance. This assumes that there are no reasons NOT to short XLNX.

When you establish balance try to find stocks which are similar to the first stock in the trading group. This does not mean by industry, it is based ONLY on price or Volatility.

At this point we would have 1 long (DISH) and 1 short (XLNX) and we would implement the 5-point rule.

Let's assume that the Market moved up by 5 points to 1905. This triggers an overweight long position. We filter the Focus List for Long Day Trading Ideas near all inflections and we get:

Long Day Trading Ideas Near Inflection

DISH Buy near 28.92, target 29.32, Stop Loss @ 28.72 (Resistance Plan)

JPM Buy near 34.52, target 34.76, Stop Loss @ 34.32 (Resistance Plan)

CSCO Buy near 17.26, target 17.79, Stop Loss @ 17.06 (Support Plan)

MO Buy near 63.49, target 65.11, Stop Loss @ 63.29 (Resistance Plan)

AMGN Buy near 59.73, target 60.30, Stop Loss @ 59.53 (Support Plan)

INTC Buy near 22.38, target 22.65, Stop Loss @ 22.18 (Resistance Plan)

ATVI Buy near 15.18, target 15.46, Stop Loss @ 14.98 (Support Plan)

COF Buy near 73.34, target 74.37, Stop Loss @ 73.14 (Resistance Plan)

We already have DISH as a Long and XLNX as a short, so we cannot choose either one of those for this trade. We cannot add to the DISH long position. We must use a different stock.

We NEVER overweight a trading group using the same stock.

In this example, we could use JPM so long as there we no reasons NOT to buy JPM.

Therefore we would be overweight longs (DISH and JPM long, XLNX short).

Our trading plan would be: Buy near support (1900) target resistance (1928). Our stops will always be .2.

Key Points:

We always use the trading parameters for buy and sell triggers and targets. We don't use the targets for the stocks that are offered in their respective trading plans.

We always enter the stocks based on their respective entry levels in their trading plans.

We always use the stop losses as offered in the trading plans for each stock.

Basically we don't pay close attention to the targets for the stocks in their trading plans because the Market targets are more important to us The targets for the stocks offered in the trading plans should be noted for reference, but they should not influence your decisions to exit your trades

In our example, if the Market reached our target of 1928, we would close our positions. We would take profits from our long positions, and if our short did not already stop, we'd close it too. We'd erase all the stocks from our trading group and we'd start over.

Whenever we close a trading group a new trade is usually triggered.

By taking these steps we can correlate Market Timing with Timing in individual stocks and this increases our ability to find profitable trades.

At this time you should have a basic understanding of how to find stocks to trade using our system.

You should now know:

When to trade

How to find What To Trade

Where to find a trading plan.

All you need to do is to execute your trade.

Please review the last 2 lessons if you are unsure about the above referenced items.