First things first
Determining the correct bias for the day is all important for the day trader. Are we buying pullbacks longÂ or are we shorting the bounces?
What do you use to help you determine the answer to this question?
There are many techniques available to us, and we need to use something simple, reliable, and consistent.
My wife helped me get over my reluctance to reverse and go with the flow when I get it wrong and get stopped out. She posed a simple question: If you saw two $100 bills lying on the ground and one blew away, would you bend over and pick up the other one?
I had to admit to the elegance of that insightful thought.
First hour reversal strategies are powerful and are one of the first items of importance in my toolbox.
Friday’s low was made early, and routinely bounced to fill the gap. What surprised many traders next was the strength of the bounce, where theÂ “Hunter became the hunted”. This inevitably occurs in trading, and has to be endured with good poise.
What doesn’t make sense is being stubbon. I observed a few trader’s who were calling for continued shorting at multiple levels. They didn’t realize that it was easier to take the stop out and reverseÂ direction to pick up the other $100 bill.