This pre-opening trick is part of the breakout strategy used:
1) Screen out all the strong counters which are near to their 52-weeks high or their May's rally high
- these strong counters are the potentials to breakout if the mkt sentiments and volume is correct...
2) Make sure their daily volume is increasing for the past few days
- Increasing volume means the counter is receiving mkt attention or under accumulation in preparation for the breakout
3) Zoom in to check on their intra-day transactions during the final 30 trading mins for any massive buying up
- Towards the end of each trading day, sell queues are always the most dense after most retail players had been queuing since 9am...
- When massive buying up starts in the final trading mins, tat means the buyer are genuine in buying from the open mkt and ramp it up in the following day...
- During the process of last min of massive buying, this counter will be closing at day high near to its recent high...so it will have a bullish candlestick to attract more traders to join in the next day...so...the chance of a strong follow-through in tmr is quite high.
4) Check the mkt depth on the night before
- The previous day's mkt depth will show how stacking formation of buy and sell queues look like. These formations will give u an idea on how much the buying interest and selling interest are at the various price levels.
- Also take note the accumulated sellers at the higher price levels, coz the volume in next day must absorb all these passive sellers on top before the price can continue to rise up.
5) Check the mkt depth at the pre-opening minutes in next day
- If the buy queue stacking is very aggressive and the counter will gap up a few bids at opening, this set up will confirm its breakout.
- Also check if the buy and sell queue pattern is the same as the previous day...if the pattern is different, tat means there will be a major move on today.
6) Watch out for faked buy queues stacking just before mkt open
- If the supposedly breakout counter has a massive buy queues above its last traded price, u can safely jump queue to snatch at its opening price before 8.59am...
- However, there are chances tat the buy queues can disappear at 8.58:58am to trick slow traders to buy up into the opening price...
- Once u place ur buy order, keep your eyes and finger alert to withdraw ur buy queue if you spot any withdrawal of buy queue stacking at the last few seconds before mkt opens...
So, these are the 6 steps on buying strong breakout counters at opening price...good for intra-day trading...hope these steps can give you some ideas on opening an intra-day position with higher chance of winning...There are also exit signals and strategy to watch out for during intra-day trading...Exit strategies are more complicated which i will try to simplify them first before i start posting them up...
I also just shared my views on mkt depth analysis to lizard tonite...so also share out to you...Here is what I posted to him:
oh...mkt depth is different for different grp of counters...
For blue chip with fund backing, the genuine buyers dun queue to buy, so the sell queues are usually overwhelming while buy queue stacking are sparse....
For mid-cap on the move, the buy/sell queues are usually fade in and out quickly, giving a lot of false signals...
For pennies with high volume, the buy and sell queue stacking are generally belong the same group of traders doing the churning effects to suck in or distribute to the retail players...
Generally, price transactions in blue chips and mid-caps are more impt than mkt depth, coz these are real mkt action...mkt queue are just for show to give false impression of weakness or strength...However, price transactions can be faked for the pennies during their churning trades...
One useful application of mkt depth is to monitor the stacking pattern of a certain counter over a period of time....if the buy/sell queues pattern is different from its usual daily pattern during the first opening hr, tat means a big move will be coming soon...
e.g. For pineapple, the buy queues are usually very little in the morning and massive buying only starts in the final 15mins...When I spotted a massive buy queues stacking in the first opening minutes on 9th July, I just go double long at the opening price...
For UET, the usual buy queues stacking did not appear in the opening hr of last friday, which give me a warning signal to offload it for any early sign weakness on tat day...tats why i start to offload when the sell queues at 0.155 rise to 600+ lots at 10.15am...
In conclusion, dun just look at the live mkt depth...do a comparison with its usual mkt depth pattern...coz every counter got its own controller or banker...when the usual mood of the controller is changed tat day, it will reflect on its mkt depth stacking on the same day and subsequently reflect on the price movement...
