Previous Highs/Lows

There are four different things you will need to be aware of when trading intraday. Essentially, all of these items represent support and resistance.

• Previous Day High

• Previous Day Low

• Pre-Market High (You will need to turn on Highlight Extended-Hours Trading Hour Session in your settings for pre-market)

• Pre-Market Low

Here are the rules of trading intraday

1. Use Pre-Market Highs/Pre-Market Lows and Previous Day High/Low as profit taking points or look for breakouts/reversals 

2. Look for your opening candle 

   • • Select a timeframe that works for your trading style

     • Most common are 5 min, 10 min, 30 min, or 1 hour

     • The lower the timeframe the faster you will need to react to the market movement

     • Typically the first 30 min to 1 hour is the most volatile and price may whipsaw

     • Know your exits (four areas listed above) and follow your plan

     • If your trade breakouts past the highs and lows, look at the previous daily candles highs/lows for future targets

3. Consider waiting for a pullback into support/resistance with a confirmation candle for your reversal

   • • Just because it breaks, it does not mean it will continue going in your direction

4. Use full candles or at least most of it

   • • Typically we wait until the candle closes to make our decision

     • You may also enter in the final moments of the timeframe you are using 

     • ex. Last minute of a 10 minute candle, final 5 minutes of an hour candle

     • Be careful as during opening and power hour (last hour of trading) stocks can move tremendously in the final moments

5. Always have multiple timeframes up for you to put the trade into perspective. 

   • • Personally, if I am trading on a 5 min chart, I will have the 30 min chart and a daily chart up (5 min, 30 min, daily)

     • If I am trading on a 10 min chart, I will have the 1 hour chart and a daily chart up (10 min, 1 hour, daily)

     • These are my personal preferences for trading based on my system and time spent in the market

     • While everything forms from lower time frames, seeing the bigger picture can give us a better idea of what will happen

6. Move up your stop loss

   • • In general, your take profit % should be high when reaching your targets as reversals are common. 

     • Keep your hard stop loss at the beginning of your trade for the first few candles if using 5-10 minute. I cannot tell you how many times I moved up my stop loss early to see it whipsaw, close out even, and then move in the direction I wanted. While exiting at even is not a bad thing, moving our stops early will cause us to miss opportunities.

     • Pullback Stop - One of the best stops to set is below a pullback (notice how we always mention pullbacks)

       • • Offers the first point of profit taking and where buyers are still interested in acquiring the stock. 

         • This is why we often wait for pullbacks to enter into a trade since we do not know if the trade will continue in the break direction or if it will fail.

     • Average True Range Trailing Stop - This is one way to intraday trade when you do not have the time to watch or you need to leave your monitor. 

       • • I often use this stop if I believe is trending hard in my desired direction or simply because I cannot watch

         • This will continue to move my stop based upon each new high it creates

         • It gives me the best chance to secure my profits as it moves up quickly by keeping the stop shortly behind

         • To set this up, you can pick an arbitrary amount for your position to close off of new highs

         • Another method is using the ATR (Average True Range). If you add ATR to your chart, it will show you a line graph on the bottom to showcase the dollar amount of movement per candle. 

         • Simply use that number or slightly more since stocks like to continually test highs and lows 

         • If a stock is at a resistance point, I may keep a tighter stop on some of my position while letting the others use a wider trail stop for longer plays.

         • As you spend more time in the market you will develop a sense of the your exits

     • Breakeven Stop - This probably should have been #1 to me

       • • After allowing your position to go into profit, attempt to set your entire position at break even

         • Wait for a candle close above your entry and watch until another candle forms and closes. Upon the next candle closing in your desired direction you can set your stop loss at break even

         • I mention waiting until the second candle as the beginning of trends often have retests of previous candles before moving in your desired direction.

         • Remember, when you first entered into your trade you were willing to lose your risk if the trade did not go your way. Give your trade time to work before moving to break even.

         • After you are several candles into your trade, look for take profit points or look for breakdown in structure of your trade (bullish trend - red candle closes below previous candle, bearish - green candle closes above previous candle)