Medved Trader user group

[Mr Nasdaq]

"How do you define a day trade?"

A "day trade" is one which is established, then closed, within the same day.

It is similar to a "swing trade" in that it is best established at either an area of "Gathering Support" if going long or an area of "Gathering Resistance" if going short.

The rules for exiting a "day-trade", however, are not as clear-cut as are those for exiting a "swing trade".

Here is the approach, in part, that I take:

If I venture a purchase, for example, at "Gathering Support", I keep an eye on the 5-Minute Chart. If the trend turns up, as it often does from an area of "Gathering Support", and if pullbacks are finding Support at the rising 20-Period Moving Average, then, I figure that it is safe to hold on.

I also keep an eye on the "Support & Resistance Report" spreadsheet. It keeps me informed as to which individual aspects of Resistance lie just ahead. An individual aspect of Resistance, whether it be a moving average, a bollinger band, an "R2" Pivot Number, or the previous day's high, etc. can serve as "natural" place at which to close a "day trade".

It's also a good idea to keep an eye on the CCI and ADX Indicators of a 5-Minute Chart. Extreme readings in either or both of these indicators can serve as a sign that it is time to exit a "day trade".

An "extreme" reading for the CCI would be above +200 for a trade on the long side or below -200 for a trade on the short side.

An "extreme" reading for the ADX Indicator would be above 40 for both a long or a short trade.

The most important trading rule that I try to follow is "Never let a winning trade turn into a loser" and if it does turn into a loser, keep the loss small...

It's ordinarily unnecessary to take more than a 10 to 15 cent loss on a QQQQ trade with the aid of the "Support & Resistance Report".