Volatile growth stocks are the right trading vehicle for very different trading styles like trend trading, swing trading and also day trading. If there is volatility on the larger scale, there must be also day to day action. As a trader you are using stops and day trading is no different here. There are also many different day trading systems, but the grand number one is riding the trend into the close, if there is one, of course.
As usual with trend trading it is not as easy as it looks. For executing the stop loss strategy it is absolutely necessary to minimize the number and or the size of the many smaller losses that inevitably occur with this trading method.
Generally there are two methods. The more coarse one looks for extraordinary day moves and puts on a position near the open. The stop loss point is simply the day low, for long trades.
If there is some strong news that let the price gap over night or the stock is in breakout mood, the following move until the close is often much bigger than what the price had already seen so far since the open. It is this asymmetry that leads to a favorable risk reward ratio. A successful entry into a news-driven run that was planned as a day trade can also be extended into a growth stock trade.
Just one more word to the gap. A gap is an indication of the market searching for a new price level, but with the first attempt to find this new level at the open, the right price doesn’t necessarily has been already found. The result is a market that races out of the gate.
Interestingly its direction is not known beforehand. Your horse may be racing backwards as soon as the gates open! For gap trading this means that for both up- and down-gaps long and short trades are possible.
The other well known day trading method centers around the whole market movements. Large and volatile tech stocks mirror the index, and that often strongly amplificated.
If you know how to trade the intraday trends of the index, you know how to trade these momo tech monsters. The stop technique has to be fine-grained compared to the first method. The best spots to enter the market are short and thus meaningless pullbacks of the bigger intraday trend.
Getting safely on intraday trends is not easy. Try to learn it by watching how successful traders are doing it, for instance with this index trading system including trading room access.
Clearly this fine-grained day trading method is not for the beach trader, but nonetheless it is possible to make a living by working only when you want. Eventually you have to try it yourself and see whether you master index trading or not. It is not for everybody, but it is very lucrative for those who learn to be in sync with the market.
