Be Prepared Before You Trade
01/02/2013 7:00 am EST
Like many professional traders, Harry Boxer starts preparing for his trading day 90 minutes before the stock market opens and reviews what he looks at before he starts trading.
My guest today is Harry Boxer. We’re talking about how you prepare for the trading day in the morning, what kind of preparation should you do. Harry, talk about your pre-market prep.
Well, actually, I am on my Web site an hour and 20 minutes before the opening, and I believe that you need to spend a lot of time analyzing charts and also looking at the pre-market news and seeing how that may be affecting the opening, but it is not just pre-market prep that morning.
The night before, you have to see what the closing patterns look like. A lot of stocks that are trending or just breaking through a major resistance level will just break through a little bit and set up with a lot of volume and you want to see what happens if there is a follow-through. The problem with most traders is they don’t pay attention to follow-through. I think the key to any new move on a stock is not just a one-day wonder stock but a stock that has powerful after moves.
All right, so I know you are a technician. You look at a lot of the charts. How much do you follow the news and look at that before the market opens?
Well, even though I am a technician, I don’t follow fundamental news, but I know that affects price so I look at it in the morning. I want to see what biotech stocks may have gotten a drug approval and are going to gap up 40%, 50%, or 100%, or what companies are being…. The other thing you need to pay attention to is acquisitions because a lot of people get ecstatic because the stock is going to gap up but usually the gap is up near the acquisition price and it stays there all day. It is not a tradable stock. I ignore actual merger news, unless it is a merger rumor like in the case of recently OMX and Office Depot. That stock has been thrusting. Even Netflix has been moving lately because of news about potentially a takeover so I do a lot of pre-market prep analyzing charts and going over the news and how it may be affecting pre-market activity.
Do you have a basket of stocks you are looking at or are you literally flipping through charts online of the whole market?
Well, I do have, I find out when you find stocks that are moving or thrusting, I keep them on my list. I may have 500 or 600 on there in the morning. I just want them on there so that, if they suddenly thrust, I don’t have to go through the market percent gain leaders that day but during the course of the session, I constantly look at percent gain leaders that day and also volume leaders and using Worden Brothers volume buzz, I find the amount of shares traded at any one time that day as a percentage of what they normally trade at any one time during the day and so it gives me an idea of where money is moving.
Do you have a limit? Is it 20% higher than average or 100% higher than average volume?
Oh, I want to see at least, on a real thrustable-type day, I want to see five to 10 times more than average volume, something that really shows a lot of money is moving into it and there is a lot of trader activity.