Market Talk with Piranha is currently moving to its new home at chrisperruna.com. The new site is up and running but many of the posts need editing as the images and stock charts did not transfer successfully (thanks blogger). I will post all new entries to both blogs – Thank you for your patience while I make this change!

Thursday, January 19, 2006

Away during the Trading Day

MSW Member Question – Part #2:

Hello Chris,

I am new to MSW and also to investing in general. I had a question regarding breakout volume. Intra day, how is it possible to determine that there is above average volume? Let's say that early in the morning, the price is around 17.50 and the pivot/breakout point is 17.75, how is it possible to determine that there is above average volume for this particular stock so early in a trading day? I'm a bit confused. Also, I attend school for major parts of the trading day, is it even possible for someone like me to focus on breakouts if I can't be at the computer monitoring the stock and volume?

By the way, I'd like to say thanks for all your great screens. I have learned so much in just a few days.

Talk to you soon

My Answer:

To answer your second question: anyone can trade without monitoring their stocks during trading hours. I don’t day trade and I don’t need to watch a computer during trading hours as I make 99% of all my decisions after the markets close so I am less likely to make a poor emotional decision during the intraday action. If you continue to read my screens and my analysis each night, you will realize that I make many of my trading decisions over the weekend when I can’t be influenced by live action. Believe this or not but I almost always make better decisions during the weekend after I can digest larger amounts of information versus a decision during a weekday or week night when emotions are flying high. Again, this is just my own style as it differs for each person.

For example if I see a stock creeping up on a breakout area over the weekend, I will make a decision in my head to buy immediately if it passes the pivot point on strong volume the following week. I have triggers set up to alert me when this happens during the week so I can react without hesitation because my mind is already made up. I have thought-out the scenarios in my head before the breakout happened so I don’t have to think twice to make the buy – it’s already a go.

In your case, you can set up automatic trades in your account while you are in class to buy certain stocks with specific parameters that you set the night before. If your trade triggers hit but you find out the trade didn’t go as planned, sell the following day – not a big deal. Remember, it is not a bad thing to sell – too many novice traders think it is bad to sell if they are wrong. The best thing you can do is sell immediately when you know something is wrong – it saves you money!

Piranha

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