Free Intraday Tips for the Stock Market

Day traders rely on intraday information to inform their trades. While strategies widely vary among traders, many participants look at similar indicators. Developing your own successful trading method is a tall challenge, but you can easily learn some basic techniques. These tips should improve your experience and may provide the missing link in your trading strategy.
Seek Intraday Trends
Nearly a century ago, Charles Dow outlined the main components that create a stock market "trend." Professional investors usually consider the Dow Theory when making long-term decisions. But trends also appear in ultra short-term intraday periods. As with long term investing, simply following a trend is an effective strategy for creating profit.

A trend is simply a sequence of "higher highs and higher lows," no matter what time frame you study. If you look at an intraday chart composed of five-minute bars, a trend is just as clear as on a daily chart spanning many months. When a particular stock rises over several minutes, then declines slightly to form a peak, or "high," and then rises again to form a higher high, the stock may be trending for the hour, or for the day.

Entry in a trend is a matter of personal preference, but many traders enter during the decline from a new high. If the trend continues, the trade is profitable quickly as it creates another new high.
Dow Transportation Index
Like the Dow Industrial Average, the Dow Transportation Index ("TRAN") is a price average of many stocks. In this case, all the stocks in the TRAN are transportation companies, such as airlines. The transportation sector often leads the rest of the stock market. It is not a signal in its own right, but it can lead to greater confidence when trading against the rest of the market.

If the TRAN is steadily rising throughout the day while the rest of the stock market, as indicated by the S&P 500 index or another indicator, is falling, a reversal could be approaching.

Traders who utilize leading indicators may identify a market reversal more quickly.
Value Areas
Some stock charting programs offer a feature called a "value area" display. The value area represents all the stock activity within one standard deviation from the average traded price of the previous trading day. This can be difficult to calculate yourself, so value area charting software is essential.

The value area simply consists of a trading range where the market is said to have been "in balance." This means most traders exchanged shares in this range. When the market moves outside this range, most traders, causing a reversal back into the value area, either reject it, or the breakout is sustained and the value area is left behind.

Knowing the value area's extremes makes it possible to trade with confidence against market action. If prices approach the value area low and fail to penetrate it, this could be a good opportunity buy shares as it may be the lowest price of the day.


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Pimp My Trade: Day Trading Strategy: Market Profile Value Area

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