5 - Intraday Pattern Practice Session

8/7/2019 5 - Intraday Pattern Practice Session

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EQUITIES:

LESSON FIVEIntraday Pattern Practice

The Trading Pitt 2010 1


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Hit the Bids Sell via a market order at the highest price thatyou can sell at.

Pay the Offer Buy via a market order at the lowest ask price

Bid Use limits to get filled on the bid price, those willing tobuy.

Offer Again use limits to get filled on the ask/offer price, those

who want to sell. Reserve Orders Only show a fraction of your size in market

depth. You can see this when you see prints at the same pricelarger than the shown size

ECNs Electronic Communication Networks are the new formof exchanges that eliminate the specialist model and attempt to

provide direct market access to participants. (ARCA, ISLD,Hotspot for FX, etc)

TERMS TO

KNOW:

The Trading Pitt 2010 2


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PREP WORK

STOCK BTU

AUGUST 3RD,

2010

Finding the best stocks to be in, not just highbeta (beta is a historical and changing referencepoint) names.Better is to find stocks with a high ATR to PriceRatio

Recent News, Strong Stocks, U nderstanding the Bigger Picture

3The Trading Pitt 2010


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MOMENTUM / BREAKOUT

PLAYS

Intraday Lows

Holding below long time Support

Test of Strong Resistance 1st

Bounce

Above key levels

- Pay the offerWatch for weakness at resistance hitout and then rebid with less size atbreakout level


Going back to BTU: It was able to gapabove resistance and hold above the

gap after testing twice and no dailyresistance until 49

Even if you didnt get 45.50 paying theoffer above 46.00 was still a good trade


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EXAMPLES

BUY ON THE BID VS. PAY

THE OFFER

Look at the X chart below. Although hindsight is 20/20 X still

offered several good opportunitiesat whole numbers for range tradesand then holding above resistanceon a gap up 7/23

Going forward 45 and 50 will be keylevels

For any range play I prefer to addliquidity and bid/offer stock at keyprice levels This improves my overall

trading cost, and risk/rewardon that trade

Breakout trades I tend to usemarket orders to get sharesimmediately



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SIMULATION 1

STOCK: V

MAY 17TH, 2010

THIS IS A WEAK

STOCK!

Stock touches key support for a quick to no bounceDont FadeSPYs weaken and the weak stock trades throughthe level and holds offerStay short until there is a reason to cover



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KEY POINTS

FROM

SIMULATION 1

Weak Stocks Stay Weak!Make it a next day play! Where if the market gets weakyour going to sell more of that stock adding below keylevels.

Note it gets a little stronger than at the end of the day.



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From an Intraday Educational Foundation postedon their blog by Mike Bellafiore of SMB Capital

A solid intraday educational foundation isobtained by the intraday trader who sustains theenergy to complete these daily acts:

1) Diligent Morning Preparation2) Keeping a detailed trading journal

3) Visualization Exercises

4) Video review of market patterns

5) Learning from other traders on your desk

6) Tweaking your playbook7) Maintaining a positive outlook


TRADERS

PSYCHOLOGY


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SECOND

SIMULATION

JUNE 21ST,

2010

Market Gaps Up Overnight because of futuresLeaders pop on the open but fail at premarkethighs

Liquidation ensues



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KEY POINTS

SIMULATION 2

The better play would have been to getshort already weak stocks, rather thanthe leaders on a big decliners to

advancers day.



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Analysis of Gaps


ANALYSIS,

COMMENTS,

QUESTIONS?


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WEEK OF

SIMULATION

AND THEWEEK AHEAD

Week ahead watch, how the marketgaps up and try one of the 2 patternswe talked about today.


Week ahead

Documents

5 - Intraday Pattern Practice Session