How to Profit from Multiple Day and Swing Trading Breakout Plays

11/16/2007 12:00 am EST

Focus:

Ken Calhoun

President, TradeMastery.com

In his presentation, Ken shared a nice list of specific trade set-ups with attendees, focusing on a series of disciplined steps and rules designed to limit risk and optimize results.

Traders who were under the impression that daytrading is the seat-of-the-pants, anything goes methodology often portrayed in the media were (hopefully!) pleasantly surprised to discover that professional daytraders are a disciplined lot with a steady hand.

Ken started off with some simple advice, including:

  • Know your stock sector membership
  • Test, experiment; don't lose your money
  • The hours beyond 40 that you put into trading is when it really starts to pay off-experience and education are the key
  • Find out what's consistent and what's not
  • Don't trade over-choppy markets
  • Stick to your stops
  • Trade for incremental small wins, not home runs
  • Learn from your mistakes
  • Start with clean slate regularly; he advised that traders should never hold anything longer than two weeks

He also recommended that you trade three-to-seven positions at the same time for intraday trades. And for swing trades, he places as many as 11. His reasoning: placing a variety of trades provides more opportunities for wins, since all trades will not be profitable. Some will win, some will lose, and some will breakeven.

Specific indicators he likes include MACD, although he is not an ardent fan of oscillators. Ken uses MACD to look for zero line crossovers. He also likes to use RSI readings of 75/25, which acts as a leading indicator

Ken offered additional trading advice, including:

  • Trade only sectors that have moved .5% by 9:40 a.m. or 1% by 10 a.m. (EST)
  • Swing trading should only be done on 52-week highs and lows
  • To stay on top of the market makers, look for trade sizes over 300 shares as a signal of their often hidden moves

Ken also shared his list of don'ts:

  • Level II is worthless in a decimal-dominated market
  • Stochastics are wrong as often as they are right
  • Don't trade options; it's too much like trading penny stocks, and he trades only what he knows he can make money with

No attendee-whether they are day, swing, or pattern traders-left this workshop empty-handed. The standing-room-only audience found an array of tips and strategies to take home and implement.

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