One Pro's Trade Preparation
03/27/2014 9:16 am EST
Michael Thomsett of ThomsettOptions.com shares the details of his daily preparation prior to placing trades.
SPEAKER 1: I’m here with Michael Thomsett talking about the process of successful trading. Every trader that I know has a process or a routine or a schedule that they keep, so you down in Nashville, Tennessee, Michael, what kind of a schedule or process do you have for your own trading?
MICHAEL: My process begins before the day opens and what I like to do is locate what I call the chart of the day, and that’s a chart for a stock that based on the previous day’s close I’m looking for stocks that have either gone into the overbought or oversold momentum or have a huge amount of gapping prices or have gone above resistance or below support. I’ll do a chart of the day on that stock and I will highlight all of the signals I found and put it on my website and say this is the chart of the day, I may or may not trade this after the open depending on what happens after the open, so that’s how I start. After the market opens, I then go back and look at the chart again and if the things I discovered held up then I’ll make a trade and invariably, I shouldn’t say invariably but often, more often than not what will happen is if I’m doing that swing trade based on that chart of the day, either that day or the next day I’ll often be able to turn a double-digit profit often in a matter of hours.
SPEAKER 1: Are you watching the market all day long? You have a portfolio that you manage. Are you watching it all day long?
MICHAEL: No, I don’t watch it. What I do is, like I said, I start before the day opens and then I go and right after it opens then I not only may or may not make a trade, but I check all of the open positions to see if there’s any profits that I can take and then I tend to go back again about half way through the session and then a third time about a half an hour before the close. This way I hit all of those high points where things are likely to happen. At the very open, when the broker goes to lunch and puts his assistant in charge, and then at the end when everybody decides while I’ve got to make a trade before the day ends so I don’t get a margin call. Those seem to be the three moments when the action really happens in the market.
SPEAKER 1: Those are the three moments for action in the market for Michael Thomsett.
SPEAKER 1: Thank you very much.
MICHAEL: Thank you.
SPEAKER 1: You’re watching the Money Show Video Network.