Today we’re going to take a look at day trading: 1-minute, 3-minute, and 5-minute charts.
Here’s the question:
“Hi, Sasha. I enjoy your video regarding day trading and one of your video issues on how to choose stocks for day trading. I have a few questions because your video doesn’t answer some of the questions I have in my mind.
The first question is for day trading on a one-minute plan with reference to five minutes. And also the daily charts for support and resistance. How do we trade it to prevent false breakup?
And the next question is, how do you scan for the high bull stocks for day trading on a very small timeframe in one minute and five minutes. I will appreciate if you can show it to us. Thank you!”
Let me give you some insight on the screen. Typically if I’m doing day trading, I don’t do day trading a ton.
Day Trading Method
I’m looking for a three-screen version like this.
There you can see:
- daily chart
- monthly chart
- 15-30 minute chart
What does this do?
Well, the big-picture chart gives me the big picture where’s this stock. The daily chart gives me more of an intermediate what’s going on here recently. And the 15-30 minute will give you the exact entry-exit point.
If I’m looking to day trade Facebook, I know long term right now. This first chart right here tells me long term stocks been heading higher — a little bit of a couple of pullbacks there.
A medium-term, which is the middle chart, the daily chart (each candlestick represents a day) overall, it’s been heading higher. But then recently we continue to head lower.
And more recent also the 10 minute 15-minute is heading lower. And I can see that with this line right here.
It’s breaking this support line of when it gapped up.
What’s my opinion?
If I’m looking for this stock to go long, I’m looking for where’s the bounce going to happen.
I would much rather look for a turnaround bounce, maybe around 181.25. If I’m looking to go short, well, I’m going to go short for a smaller period. That’s because most of these are heading higher.
What does this tell me?
It’s telling me that two out of three, in a way, the stocks heading higher. One more recent one is heading lower. If I’m shorting it for a day trade, I only have one thing in my favor. I would much rather have multiple things in my favor.
Apple Stock Example
Let’s take a look at Apple. Overall, stocks been heading higher.
Recently we’re heading lower and short-term for the trade we’re heading lower. What I would rather do is have all three of these where stock is heading lower long-term medium term and short term.
That’s the typical approach I would like. But if that doesn’t pan out and it doesn’t work out well, ask yourself how many things are in my favor.
The more things in your favor, probably the larger the position starting you’d want to do.
Best Buy Stock Example
This one’s been heading higher. Now it’s topping out, and maybe it’s pulling back. This might be an interesting one. Overall, the long term has been heading higher, but then here we’ve been heading a little higher, and now we might be topping out around 75.
You can see that over here as well.
And now recently we’ve been heading lower. In the short term, we’re heading a little higher, so now we might be rolling over. If I’m looking at a 10-minute 5-minute chart, you say it’s at the top range.
If I’m looking short, let’s say I do 300 shares as an example. Go ahead, confirm and send that in, and it’s filled.
Now I go to Best Buy, and now there is my position.
I didn’t make my decision, as you can see, based on this exact last bar. Why? That’s because I have longer time periods available.
This last bar could be heading higher. But the longer plays I know is heading lower.
You don’t want to psych yourself out with these kinds of things that you see. It’s a green bar. That’s where people go wrong.
This is my resistance level. And I’m basing it on that.
I’m not basing it on that is a recent bar. It’s heading higher.
Don’t get psyched out. You have to give it room to wiggle. Now, as it continues lower or if it goes above that bar, I’m out. I might be out about $186, but if it heads in my favor, it continues to head lower, I’ll start buying back these shares.
I might only do 100 at a time. And I’m not doing the full scope for you. I’m just doing a 100 shares at a time. That’s the case because if you are getting rid of the full amount, you’re not letting the stock go and work in your favor.
With time what you’re doing is you’re getting rid of 100 shares, 100 shares, and 100 shares. When you’re ready, you hit confirm and send.
You get rid of 100 shares. And then you let this continue to work in your favor. And then you do another 100 shares, and you might do that two or three times throughout the day. And then you close out your position.
That’s what happens in 6.5 trading hours, but you might only be in the trade 2 or 3 hours if you’re making a day trade like this. That’s how you would approach it, and when you finally close out your position.
I wanted to show you how I would approach it. If you approach it differently – that’s fine. However, I always tell people to take profits in the strengths; you’re taking money off. In this case, you’d be taking shares off.
Day Trading on the 1-minute Charts
One minute is just too quick. If you’re doing the one-minute, you’re better to use the active trader. There’s an active trader right here.
You have these buttons:
There’re even hotkeys you can set up. And then you trade this way. But I don’t like to do it that way because typically it’s quick enough.
You’re just trying to do a bunch of trades, commissions start to add up real quick, and it’s a stressful thing to do. You have to be on the screen and watching it like a hawk, and I don’t enjoy that lifestyle too much.
Sometimes it might be fun to do, but once you have kids and those kinds of things, you prefer option trades and stable trades. These are the things that you’re in for a handful of days. And these things don’t whip you around, and you don’t have to focus in as much. I’m getting older, and I don’t want to be always at the computer screen all the time.
Instead, I enjoy making these posts and videos for you guys. It’s much more fun and engaging.
A Better Alternative to 1-minute Chart Day Trading
I’d rather put on an option spread like Amazon.
In this case, you let this thing sit and work, and it doesn’t matter if it hits it perfectly, you’re still on a $5,000 investment you might be up to $600.
That’s much more favorable for me.
If you enjoy day trading, there’s nothing wrong with it.
It’s just a different approach, but you have to spend time watching the ticks and watching the screen very carefully.