Monday, December 04, 2006

Two Sessions in One

Trader ZBS wrote about splitting the trading session into two separate parts - the morning session and the afternoon session. By looking at the usual momo stocks today (AAPL, AKAM, RIMM, GOOG, BIDU, etc.) and one can make a good argument as to why it might be a good idea to treat it as two separate sessions. Today's pullbacks started a little early (around 1120AM), but it would be much easier to play these stocks if they were treated as going through two separate sessions. I've seen this happen more than once, so I know that it is not some random coincidence that stocks pullback at around noon time.

The alternative would be to find stocks that do not follow the trend of the tech stocks. These would include the gold stocks (like KRY, AUY, etc.) and the uranium stocks (EMU, FRG, URME). Others include biotech, but I find biotech stocks even more risky than tech stocks (they live and die by the roll of the FDA dice).

Yet another alternative would be to, during the trading session, somehow be able to switch from the breakout trading mindset, to the pullback trading mindset (ie. look for a successful test of support instead of looking for the break above resistance). I haven't yet figured out a way to do this, but it's an idea that I will be working on as well.

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