Stock Selection Criteria
- Minimum Volume: Stocks should have a minimum opening volume of 300,000 shares to ensure liquidity.
- Float Size: Preference is given to stocks with a float size under 25 million shares, with smaller floats being more favorable as they can lead to higher volatility and potential gains.
- Volume per Candle: Ideal volume per candle is around 25,000 shares, though volumes as low as 5,000 shares are acceptable at a higher risk.
- Spread Limitation: Stocks with a bid-ask spread greater than $0.20 are avoided to reduce costs related to spread.
- Adherence to a predefined key-based system is recommended to prevent overexposure by selecting quantities larger than your standard day trading size.
Maximum Loss per Trade and per Share
- A hard stop is set at a $100 loss per trade and $0.25 loss per share to manage risk and protect capital.
Stop Out Action
- Immediate execution of a stop-out action is mandated if the maximum loss per trade or per share is reached, to prevent further losses.
Daily Loss Limit
- A daily loss limit is set at $500. Reaching this limit triggers a halt in trading activities for the day to safeguard against significant capital depletion.
- The strategy emphasizes the importance of accepting losses without attempting to average down, recognizing that a controlled loss is preferable to escalating a bad trading day into a devastating one.
Trading Hours and Setups
- Trading is concentrated during the first 1.5 hours of the market opening (9:30 am to 11 am) for day trading and the last hour (4:00 pm to 5:00 pm) for large cap and swing trades, especially around earnings announcements.
- Trading at the Top: if you will buy at the top then buy half size.
- Favorite Setups
- Special attention is given to “halt setups,” where a stock halted for 10 minutes on an upward trajectory, combined with positive news and volume, is considered a strong buying opportunity.