Excellent question from a new trader

The Question:
"Hi, 

Yesterday I discovered your blog through the comments you made on averagejoetraders blog. I found it interesting and helpful like his. After about 2-3 months now of trying to make some money trading I feel as though I've learnt a lot but am yet to be profitable! The good news is I haven't blown up an account or lost much either yet. The thing that keeps me going is that I am utterly determined to make this work and the fact that every successful trader I follow has blown up their account when they started out so I understand it's normal for people to start out like this!

Anyway after scrapping the ideas I have been trying last week I decided I would try follow someone else's plan to see if my interpretation of the days price action would be that different to someone more successful. So I put THRX, CRIS, CYBR and HZNT up. HZNT opened weak as you said you would be looking for and I saw what you saw on the daily chart. I was going to just watch but I ended up trading tiny size (100 shares) instead. I concentrated on the level 2 much more than I do usually to try and see the things you mention in your blog - the ask being hit with size and orders stacking up. I saw both these things as well as the stock gearing for a 18.75 breakout which it eventually did. I thought it would go beyond 19 today but wasn't to be. My initial entry was not so good because I kept placing an order on the bid then kept missing out as the stock rose higher! Anyway I've included the chart so you can see my entries and exits.

I also included 2 other charts from today which represent an on going problem for me and wondered if you have an opinion - is a ticker gearing up (ABCDing as Nate says) or is it a double/triple top!?

CRMD - the daily is clearly extended. There's the big push out the gate to 5.45 this morning then the pull back... then the push around 11.45 to HOD again. Now I'm thinking I could short this up here as a double top with a tight stop... then I think no it could be gearing for a fast burst over this resistance to 6 and beyond and it has 'midday strength' -something I am wary of and I end up not trading at all.

CLDX - similar thing. Push out the gate then pull back (a lot this time almost to LODs) then climbs to HODs where I think Hmm short for double top with tight risk? Chicken out of that then watch it drop then rise for a third time and I think again hmm  triple top? I could short? But no this must be gearing for a move higher and I don't do anything again and watch it drop!

Anyways I hope I don't bore you too much with my long email, I am just trying to learn this stuff and I decided I should try communicate a little with other traders - something I don't do... and thanks for the blog, it's been helpful as you can see from today!"

HZNP

CRMD

CLDX

The Answer:

It seems you are by far way more advanced already since you understand what the trading is all about. 

HZNP you did just fine, just do not try to get filled on the bid when its fast moving  stock. I really wanted to have it dropped lower, closer to 17.50 ( daily support) because then I am more comfortable with bigger size, and I have more room to confirm the bounce from 17.50 ( or so) with higher lows and higher highs. Notice on your first entry you had lower highs and lower lows,it could have easily been a loser trade, but I guess the Time N Sales gave you a better clue.

Second entry was much better , since you  had higher high and you nailed that pullback very well, the pull back became your risk, and reward was great selling it with almost 3:1 ratio. It could have gone higher then 19.00 but who cares ???   You made your money twice on the same stock, CLOSE THE SHOP  :))

CRMD: ABCDs work the best in scenarios like for example HZNP if it had dropped closer to 17.50 and then creating ABCD would be very favorable long  trade.Why? Because 17.50 is great daily support , a base, from where it has good launch pad to go very high. CRMD, was already well overextended , as you noticed!! Opened with push up above PDH, , and looking to short was a good idea specially after the second lower high, then you could cover some , then short the third lower high, in and out cover some. I was short too late , made mistake, as you red my blog, and when it didn't hold the HOD , dropped below 5.40, that was a sign of weakness , plus the Time n Sale prints were the clue again for more favorable short, let alone the daily overextended condition.

CLDX: This gapper , on her first day up, was trading above 24.00 which was daily resistance. Always,  have the daily chart next to the minute chart  draw the main support line of the daily in this case , 24.00 on BOTH charts. After the pull back and testing the 24.00 you could have watched for any long entry with risk against the 24.

I normally wouldn't short the double top, because it is the first day , may run much higher, and even if it doesn't , and even if the short may work, I think the downside is very limited most of the times. However what ever you do , even if you shorted it, this type of stock is big mover, as long as you have your stop tight , you have not much to worry about.The secret of day trading is the BIG MOVERS. Less choppiness,  risk can be the same as any other stock ,but much higher momentum move when you nail the right entry.

What you read in this entire blog is all you need to know about day trading technicals.  The rest of it is the battle with the emotions, and discipline to execute efficiently, which is the hardest part  for most  traders. 

Hope this help, and if it does, would love to hear about your progress.

Salute !

*Here is a little bonus tip ( trick) for those who red this boring stuff so far :)
 When there is a fast moving stock, and I want to get filled long in expectation to catch a momentum move up with bigger size, I sometimes throw in a 100 shares at the bid just to see if they gonna get filled. If I cant get filled at the bid a tiny size, that is a green light there is a momentum building up for long , and I go with size at the ask. If I get filled at the bid, then that means trouble for going long.