People who succeed at day trading do three things very well:
• They identify intra-day trading strategies that are tried, tested.
• They are 100% disciplined in executing those strategies.
• They stick to a strict money management regime.
Intraday traders have an arsenal of strategies but one very popular Intraday strategy called the “Open High Low Strategy” has had reasonably good results as is evidenced by the popularity.
In this strategy, Buy signal is generated when a Stock or Index has same value for Open and Low, while Sell signal is generated when it has same value for Open and High. Prabhudas Lilladher’s Mobile App (www.plindia.com/plmobileapp) presents this strategy live in its Scanners section. It is ideal that traders watch this screen from 9.15 and then decide the trades at 9.45 AM depending on which stocks continued their momentum in the same direction as at open.
One can keep the stop loss as the previous day close rates . In any case Allow no more than a 1% move against you from your entry point.
Once momentum fades and buyers are thinning out, take your profit.
Ideal Strategy Using PL Mobile App
Create a watchlist from the scrips appearing in the Long and Short section of the Open High Low Strategy at 9.15. Note down the previous day’s high lows as well as pivot levels, all of which are available in the PL Mobile App. Till 9.45 , see the behavior in the scrip’s price moves, movement in Open Interest in case it is a derivatives security as well and of course, whether any news is there on these stocks. If you want to go through charts, please do so as well on the Mobile App which provides you tick by tick charting
9.45 AM: Entry for Long:
Note down previous day’s High price and after market opens today, wait for the price to breakout yesterday’s high and when broken check if Today’s Open = Today’s Low at that time, if Yes go long with Stop loss as today’s Low price.
9.45 AM: Entry for Short
Note down previous day’s Low price and after market opens today, wait for the price to breakdown yesterday’s low and when broken check if Today’s Open = Today’s High at that time, if Yes go Short with Stop loss as today’s High price.
Exit: Exit at End Of the Day or a defined stop loss. If your stock hits a new low for the day (long trades) or new high for the day if you are short, exit the position. The new highs or lows are also reported by the Mobile App in the scanners section. A day trade is intended for initial moves, so there is no purpose in widening stops to accommodate a stock moving in the wrong direction. Get out if the stock breaks a low (or high if short) as you can reenter the trade if it triggers again.
Traders can use the Resistance Support levels in the PL Mobile App as points of reference when deciding the stop loss – with support level / resistance level breaks defined as stops OR in terms of absolute amounts, lets say 0.5%
• Ideally, you should run the strategy on at least 5 scrips for a well diversified approach