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Among active traders, there’s a bit of a split decision when it comes to trading the same stocks over and over.  Some are for it, trading only a few tickers out of familiarity, while others don’t necessarily see it that way.

Personally, I’m trading a very broad variety of stocks at any given time.  After closing out a position, it may be weeks or months before I’ll trade the same stock again, or it may only be hours or days.

It all depends on how it’s acting.

There’s nothing at all wrong with going back to the well for a repeat trade, provided two things are kept in mind:

– You have an entry designated, along with an exit plan (for both your stop and target levels).
– Your plan is based on price action (not simply because it’s been good to you in the past).

So long as you’re observing those two things, have at it.

Just be very careful returning to a stock you’ve recently traded because it’s easy to revenge trade if you recently took a loss in it, while it’s easy to be overly-hopeful if you’ve just booked a nice winner in that same stock.

With any trade, it’s crucial that you’re staying objective and have a plan in place.

Trade Like a Bandit!

Jeff White
Take a trial to my Stock Pick Service to get my trades.

Follow @TheStockBandit

Probably the single most-often asked question of me pertains to determining the timeframe for a trade.  Once you find a quality chart pattern, how do you decide whether to take it for a swing trade or a day trade?

I never hesitate to provide an answer to this because it’s such a great question and one that every trader faces. Of course there’s no right or wrong way to determine this, but for me there are a few things which play a role in my decision.

First and foremost, anytime the market is generally choppy, I’m less-inclined to initiate new swing trades (multi-day trades).  As a result, during those times I’ll usually shorten my timeframe and go with intraday trades as a preferred timeframe.

When it boils down to just the charts though, for me it comes down to 2 major elements.

Quality of the Base

If the base isn’t quite completed or it looks like it needs more work, I’ll take the trade for a single-day play rather than a multi-day swing.  For example, an ascending triangle which isn’t yet completed (needs tightening) will entail a much wider stop loss.  In that type of situation, I’d prefer to participate in the initial breakout rather than hold for a larger move that may involve substantially more risk.

The history of the stock also plays a role here.  If XYZ has in recent months proven able to generate good follow-through from similar patterns, I’ll go with it for a swing.  However, if it tends to be a 1-day wonder type of stock, I’ll usually opt for the single-day play.

Here’s an example of a stock with a recent history of making 1-day moves as it clears key levels, making it better-suited for single-day plays rather than tying up capital for days or weeks at a time without reason to expect movement:

Potential for a Sizeable Move Relatively Quickly

I want my capital tied up as briefly as necessary in order to get paid for the risk I’m taking.  So a sluggish stock has less appeal to me, knowing that I’ll have that capital committed for a potentially longer period of time and for a potentially smaller reward.

Additionally, if there’s resistance (key levels or prior relative highs) not far above the base in question, I’ll likely lean toward a single-day trade timeframe and just aim to capture the initial breakout.  Here’s an example of that with price challenging a recent level (blue) and a pair of prior levels (red) not far beyond which could interfere with lasting progress on the upside:

For those who are able to watch the market intraday, single-day plays can prove supplemental as a cash-flow strategy.  Risk can be managed closely for those who aren’t prone to gambling or overtrading.  Intraday strategies can also provide the best approach during times of extreme volatility, when overnight gaps are happening frequently, or when high levels of cash are being maintained on an overnight basis.

Swing trading and position trading can tack on big gains quickly in an account when times are good, but having the flexibility to operate on multiple timeframes is an excellent way to diversify as a trader.

Finally, it’s imperative to understand the timeframe you most favor and seek to operate primarily on that timeframe.  If that’s intraday, do it.  If that’s on a multi-day basis or a multi-month basis, do it.  Know which style you favor and which style favors you, and aim to make the bulk of your trades on that timeframe. At the end of the day, we must all trade in accordance with what we’re comfortable with, and that’s something that only you can answer.

Related Posts:
Trading Timeframe Influences Position Size
Trading Roadblocks

Trade Like a Bandit!

Jeff White
Take a trial to my Stock Pick Service to get my trades.

Follow @TheStockBandit

When it comes to the software I use with my trading, it’s important to me that not only does it meet my needs now, but that it’s constantly improving.

Two of the main software programs I use daily in my trading are TC2000, which keeps getting better, and TOS (which also keeps getting better).

Over the weekend, the latest update to TOS added a few items, but a couple of the Watchlist Column features stood out as particularly useful.

The first is a Range indicator, which allows you to see at a glance where a watchlist item (index, stock, future, etc.) stands in relation to the relative high and low for the Day or the Year.  In the example below, the first item is at 14.61%, which means it’s in the lower 1/7 of the Daily Range right now.  For the Year, however, it’s at 98.63%, which is to say it’s right near the high of the year (only 1.37% off the high).  This is very useful to quickly identify strength or weakness across a couple of key timeframes.

Another feature that was unique will apply to option traders, which is the ability to display the Extrinsic and Intrinsic value of an option at any moment.  Intrinsic value is the share price less the strike price for calls, or strike price less stock price for puts.  Extrinsic value shows the difference between the last price for an option and the intrinsic value.  Traders watching specific options can utilize this to see in a different light how much of an option’s value is ITM and how much of its value is being derived by time and volatility.

Here’s a look at the features:

It’s hard enough to find tools you trust with your trading, but when you do, make sure they’re built by people who are committed to continually making them better.

Trade Like a Bandit!

Jeff White
Take a trial to my Stock Pick Service to get my trades.

Follow @TheStockBandit