Through my trading career I was applying a various type of strategies on various markets. I have been scalping futures based on a tape reading technique, I have been trading Price Action mechanisms on forex, crypto and futures as well. The closest trading style to my personality type is the day trading stocks. If you interested how I make profits in a repetitive manner, just trading the stock markets, keep reading. I will show how you can start grow your account balance with the simple key elements of our Horizon Strategy.
First Key Element: Competitive Advantage on the Stock Markets
It is essential to understand your competitive advantage in the markets. Because of this, intra-day trader is able to stay in profit and make money. In order to fully understand your competitive advantage, it is essential to understand how market works and who are the people involved in trading and the logic behind their actions. Price fluctuation is based on two factors: activeness of buyers and activeness of sellers in a particular moment. Price flow is majorly dependent on the ratio of these two factors in the market. Let us try to locate the entry points from the market`s perspective.
First of all, we have to decide to which category of people involved in market we belong to. Later on we try to locate any intra-day trader with a value from 100 to 2000 shares, that is trading shares pricing from 5$ to 150$ with a daily average of trades equivalent from 1 million to 5 million dollars. To understand how it affects the market we can calculate: The minimum daily average that is traded is 1.000.000 shares.
Daily trading session consists of 390 one-minute candles; the average amount of a one-minute candle is 2.500 shares. According to this, we can suggest that if we take the highest position (2.000 shares) in relation to non- liquid shares (1 million of shares a day), then we would not overcome the volume of a one-minute candle, and on average the volume of a position will be less than 20% of a one-minute volume, so it comes to the point that the effect of such trade can be viewed as not significant and we can ignore it.
This is our competitive advantage: we can open a trade and close it any time we want, not affecting the price. Here come the questions, how can we use this? Our main goal is to find big players on the market that open or close significant trade in a limited amount of time or limited price range what is equal.
Who are big players?
Let us know find out who big players are. These are various Hedge, Pension funds and investors that have more than 1 billion dollars under control. Top 20 Hedge Funds:
It is obvious that their trades can be related to big orders. What is a big order? It is an order for "buy" or "sell" that is done within one or few trading sessions with a value of 30-40 % percent of average daily amount of shares. It is essential to realize that placing such orders majorly affects price. Why does it happen? Because most of the time there is only one big player in the market and there is no other big player to stabilize the price flow, so this is why he has to trade within average and small traders, accordingly changing the price to his or her benefit. The only thing we have to do is to locate where big player enters the market and trade with him in the same direction.
Second Key Element: How to locate a big player?
Here we run into one problem. There are more than 7.000 companies that are represented in the market. We are not being informed from Hedge Funds where the big orders will be placed today. This is why in order to find big player we should try to look at the situation from a perspective of a big player. Why does he buy or sell shares? Most of the time the reasons are behind company`s financial reports. With an aim to better understand where big players will be, let us imagine a situation if we open a restaurant. What question will be most important to us? Probably how profitable it is. The same applies to big traders, the most crucial thing that would be is a financial report of a company or a publication of estimated value over a certain period of time. This is exactly why the probability of locating a big player is higher within companies that publish their financial reports comparing to other shares.
How can we find shares that are being publicly published?
In this article, we will teach you how to find these stocks in shortest time, before it is officially published and market still did not have enough time to trade it. This is why we would have to register on Briefing.com Straight after this we have to go to Calendars ---- Earnings
We are mainly interested in stocks that published their financial report yesterday after market was closed.
Also, stocks that publish their report today before market is open
After this we should filter the retrieved stocks in case if they are not of our interest. By this we mean that big players cannot enter a stock that is not liquid. Simply because he will not be able to provide a counteragent to the price. This is why we are only interested in stocks that have a daily average volume of more than 1 million shares being traded. For this purpose, we can use a special stock screener Finviz.com and type in a company`s name and search.
Value of Average Volatility has to be more than 1.00
After we select the stocks, we have to wait until trading session opens and confirm that there are big players in the market, after what we enter the market and trade in the same direction with big players.
Third Key Element: How can we confirm if there are big players in the market?
Today I am going to share with you one out of 8 of our Trading Strategy patterns. These are the main indicators representing stocks players in the market that allow us to enter the market in the same stop with big players.
In our trading we will be using M5 (5-minute timeframe)
What does pattern consist of?
- First part is the directed flow of price to one of the sides, this tells us that these are the first signs of a big player being involved.
- However, we cannot open a trade in the end of this directed flow due to the reason that there is a high chance of a pull-back. If we enter the market at this point, quite possibly we would lose and end up with a pull-back. This is why we have to wait until pull-back period is being over. It is essential to remember that after pull-back will start to form, it is not clear if that is a pull-back or reversal movement and there is not any big player.
- This is why we have to wait until the second wave of movement, it will serve as a confirmation for big player being involved.
- After we received the confirmation, we have to wait for a good moment to open a trade. It is obvious that the best entry point is after pull-back because it will have better risk/profit ration and higher probability for a positive outcome.
How to enter the market with big players?
As mentioned previously, it is better to enter the market after the price pullbacks to the previous highest point where the last price correction took place. Afterwards, we wait for a fractal being formed. Additionally, we will have a signal that would be represented in false breach of a level with the volume spike as shown on the picture.
Let us see how we can open a trade according to our pattern
In this article I shared with you the key elements of our competitive advantage. I showed you how easily I make money on monthly bases with just one pattern of Horizon Strategy. We have 8 in total! Please just try on your own and research your stock and trade it in-line with the pattern. If you can do all the steps correctly your deposit will be raising. If you are more interested how you can make a living day trading stocks, register to our webinar. I will be happy to answer your questions there!
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