A Position Trader

A trading strategies for swing and position traders is a technique for those traders who have the time to watch the market throughout the day and have access to inter day charts. Trading inter day requires a high degree of skill and the ability to emotionally detach from the markets.
Typically the middle of a trading day falls within the time periods of 11:15 a.m. and ends somewhere around 2:15 p.m. EST. It is during this time period that someone who watches the market all day long will note that things really begin to slow down often becoming very choppy in nature not really trending in one direction or another. For that reason, this is frequently one of the hardest times to trade during the day.

On the other hand, during the time period of 2:15 p.m. to 4:00 p.m. EST things begin to stop churning and start trending. This is the time period that we will be looking to actually place our trade. After a morning rally in the markets, the mid-day doldrums soon follow as the markets begin to consolidate. It is during this time that the setup for our trade begins to take shape. However, once mid-day has passed we’ll be looking to take advantage of the price action that occurs between 2:15 p.m. to 4:00 p.m. EST.

This strategy is by using a five minutes inter day charts. Here are the guidelines that we’ll use for the trade setup:
The stock needs to be trading higher than the previous day’s close. The stock should be trading at or above its opening price. During the mid-day time period the stock should be trending sideways at or near the day’s high price. On a five-minute chart, the sideways trend should be at least 1 ½ hours in length.

During the mid-day time period the trader will stop trading and go searching for stocks that meet the above criteria, and make a list of these stocks. Once the list is in place the trader waits for the time period from 2:15 p.m. to 4:00 p.m. EST to commence.

Below are the guidelines used to trade the late-day breakout: Again using a five-minute chart, the trader will initiate a trade once prices move one tick above the side way inter day high prices. Once the trade has been initiated the trader will place a stop-loss just below the mid-day side way price base. The trader will then exit once prices begin to reverse direction or exit at the end of the day with a Market On Close order.

We will exit the trade once prices pull back. This will be a judgment call as to how much you are willing to let prices pullback before you exit the trade. The main thing to remember is to never let a wining trade turn into a losing trade. Meaning if you had entered this trade and were profitable right from the start as the stock rallied higher and you noted a pullback, don’t wait too long to exit the trade that all the earlier profits are given back as the stock retraces. Exiting at break-even is much better than exiting at a loss.

if you’re lucky enough and the stock should continue to run higher for the rest of the day without significantly pull back in price, then you can exit at the close of the day (and hopefully the high of the day) with a Market On Close order.

This trading strategy is not for all, but it can be used successfully by those who have the time to watch the markets throughout the day.