The Quick-Start Guide for Morning Hours Trading by Bob Joiner

Transcription

1 1 The Quick-Start Guide for Morning Hours Trading by Bob Joiner Welcome to Morning Hours Trading. You have joined a group of professional traders who are dedicated to making money every day in the stock market. This short quide will help you get started with your new subscription. Two Lists at 9:15 MHT opens at 9:15 ET each morning the market is open. You will hear a rooster at 9:15, calling the group together. It is highly recommended that you sign into the chat room before this point each morning. And here's why. At 9:15, I provide two lists of stocks. One is called the gap down list. And one is called the gap up list. The gap down list includes up to 20 stocks each morning that have moved significantly in pre-market trading to the downside. Once these stocks are typed into the chat, they are posted on the left panel for permanent viewing. The gap up list includes up to 20 stocks each morning that have moved significantly to the upside in pre-market trading. These stocks are only given once each morning and they are not listed on the left panel. Our members appreciate having these two lists separated in this way. So, if you're not there by 9:15, then you're missing a key element of the chat room. These are stocks which have enjoyed high volatility in pre-market trading and will probably continue to be volatile throughout the morning session. This volatility, combined with specific gap pattern strategies, gives us an edge for the morning session. Some members will use this list to execute their own trades without waiting for my signal. This is fine and welcome. Once the two lists are provided, we advise that you place all of the symbols in your quote grid window for easy access. In this way, you can quickly flip to any stock on our list. It is important to note that gaps can be played both long and short, so the two lists do not predispose us one way or another.

2 2 Market Analysis When the market opens at 9:30, I begin to look at the stocks on our two lists. I make comments about the direction of the overall market and about specific stocks. I provide numbers for you to watch such as levels of Support and Resistance in the Dow. Although we are ready to enter a trade at 9:30, we often wait 15 or 30 minutes before entering a trade. Here's why. We are looking for longer trades that we can easily enter and exit. We are not looking at trades that will only last a few minutes. Rather, many of our trades last between fifteen minutes to an hour. Trade Set-up When I see a trade set-up that I like, then I will let you know what I am looking at. But, sometimes a stock can move quickly. So, before each trade is mentioned, a gong sound will alert you to pay attention. And then you will see the trade set-up in the chat room. You may be able to enter the trade at a slightly better or slightly worse point than the trade that is called. This is because prices can fluctuate quickly. When I call out a trade set-up, I will also provide a target price and a stop price. These prices are based on lines of Support and Resistance that I see for this stock. Price can miss the target by a few pennies and it can soar past those lines as well. The target price is simply there to give you an idea of the first possible line of resistance. Equity Allocation One of the frequently asked questions in the chat room is "How much equity should I put toward each trade?" My response is always the same. It depends. Each member's financial situation, available equity, risk tolerance, etc. is different. So, this is a personal decision made by each member. Ongoing Stock Analysis As the play progresses, I give constant updates on each play. I tell you what I see happening for the overall market and also for this stock. You can watch the stock on your own screen while also keeping an eye on the chat room dialog so that

3 3 you don't miss any updates. This may seem like a lot to juggle in the beginning. But, over time you will grow more comfortable with it. The Moving Target Each member is responsible for executing his/her own trades. While you are free to simply "copy my trades" as called out in the chat room, a stock can change in strength and momentum as the trade progresses. So, these target prices are more like first impressions. I will keep you informed throughout each play. If I see that the stock may come short of its target, then I will let you know that. If I see strength building that could push the price even higher than the target, then I will let you know that as well. This aspect of MHT is very different of many other chat rooms. Since my trades are based on the charts as they develop, then adjustments in target and stop prices may need to be made on your part to extract the most profit from each trade. The difference, however, is that I will pay attention to the trade and give you updates as it progresses. We typically execute between 2 and 5 trades each day. The average is 2 or 3 trades per morning. Sometimes these trades overlap, but not usually. Which Technical Indicators Do You Use? This is probably the next question that most new members ask. I use multiple indicators and multiple strategies for the trades I call out. But I do not reveal my strategy or my indicators in the chat room. My system is proprietary and, because it works so well (and so easily), I can't reveal more details about it. A Moderated Chat Room The chat room is moderated, which means that your comments and questions pass through a moderator before they are posted. If you have ever been in an un-moderated chat room, then you'll readily see the benefits of this. It eliminates needless chatter and podium pitches. Our goal is to provide a positive and professional chat room for serious traders. And the moderator helps us achieve this goal.

4 4 While you are free to ask me questions during the morning session, I do not have a lot of time to discuss specific strategies and set-ups. If you see a stock and you wonder about its merits, then freely type in your question and I'll look at it as quickly as possible. Since we are keeping an eye on so many stocks, your visual cue could be of value to the whole group. Afternoon Trading Although I sign off around 12:30 each morning, our moderator continues with the chat room until 4 o'clock each day, as long as there are members who want to chat. This is an added feature of MHT and it allows you to learn from other traders. Many of our members have found that their trading improves by being part of a larger group of traders who share information and insights on trading. Tips for New Members Here are some tips to help you get started in this chat room. 1. All new members should paper trade for at least one week before executing real money trades. I know it is difficult to hold back, so the other option is to use a limited number of shares in the beginning. This is important because you need time to get acclimated to the way we do things here. 2. There are two things you can do to help you keep yourself from large losses. (a) With some of my trades, you will hear me say "this is a bit risky", or something to that affect. With this cue, you may not want to copy my trades on those trades, or you may want to use less shares. These usually constitute no more than 20% of our total trades. But, a "risky" trade is just that. It means I don't see the complete confirmation that I prefer. (b) Pay close attention to my discussion of the trade after I post the trade. If I see changes in the charts, then I will alert you to this fact. If the trade is moving against me, then these warnings are your opportunity to get out of the trade or at least minimize your holdings in order to reduce your risk exposure.

5 5 3. I usually set my stops at 3% below the entry price. The purpose of this is simply to avoid catastrophic losses. If a trade is going against me, then you will have ample warnings and should never allow a day trade to move against you by that amount. 4. Most day traders let their losses run too long and they cut off the winners too quickly. If this is true for you, then be aware of that fact and figure ways to eliminate the problem. Although my targets are generally set at 1% profit, many trades will go past this amount. One way to capitalize on those bigger plays is by taking part of your profits at the 1% mark and then gradually moving your stop up to guarantee better gains. You might, for example, move the remaining shares to break even at first, then to a 1% profit, and then to a 2% profit, etc. I call this a moveable stop, and I prefer it to a trailing stop. This will help you capture bigger plays. 5. If a stock does not hit its target within a reasonable amount of time, then you can consider getting out of the trade at or near the breakeven point. There is nothing wrong with a break even trade, after holding that stock for more than 10 or 15 minutes. More time in the trade equals more risk. A trade that is just breaking even after 15 minutes becomes more risky due to its failure to follow the expected path. So, you can help to contain your losses by your willingness to exit those trades at or near breakeven, rather than taking on more risk as more time goes by. 6. I will give as much warning as possible on trade set-ups. But I cannot control the market. Sometimes, a stock will move quickly. When this occurs, you have to decide whether or not you want to participate in that trade. To help you decide, you might look at my target price to see if the profit potential is worth your risk. You might set a limit order slightly above my entry and then cancel that order if the order does not fill within the next minute. Or you may just sit that one out. 7. If I am not giving warnings about a stock, then it is usually best not to micro-manage the trade. Some volatility is normal for stocks. If you are accustomed to using the oneminute charts as your guide, then you might consider using larger time frames for this chat room. A larger time window can give you a slightly different perspective and also help you stay in the big gainers longer. A larger time frame might also keep

6 6 you from stopping out of a good trade prematurely. (Again, the element of time is an important consideration here.) 8. All trades are intended as day trades. Though sometimes a trade will end up hitting its target on the next trading day, there is more risk in holding trades overnight. As always, it is your choice. I sincerely hope you enjoy your time with us. My goal each morning is to help you make money on winning trades.