Hey everyone, Ross Cameron here! Today, I want to talk about momentum chasers and share some techniques I use to decide what to trade when there’s a lot of action in the market. Whether you’re into Forex, cryptocurrency, futures, or stocks like me, there are days when everything seems to be moving. On those days, it’s critical to know how to pick the right trades.
What is Momentum Trading?
Momentum trading is all about jumping on the current trend. It’s been around for centuries. Remember the Dutch Tulip Mania in the 1600s? Prices soared, creating massive opportunities for those who could ride the wave. In trading, you can either go with the trend or against it. I find it easier to ride the trend. Trend trading makes it simpler to identify profitable trades.
In a single trading session, I traded 14 different stocks and made $11,327.39 in profit (Results not typical). This shows how effective momentum trading can be when done right. I know some traders don’t like the term “chasing,” but as long as you manage your risk, it’s a sound strategy.
Tools of the Trade
I set up my trading monitors to keep an eye on multiple stocks at once. My main screen shares my trading positions, charts, and scanners. Below, I have my level two window showing my order entries. On other screens, I have additional stock charts in different time frames like 1 minute, 5 minutes, and daily. This multi-screen setup helps me stay on top of all the moving parts in the market.
Analyzing High Volatility Stocks
Suppose a stock jumps from $4 to $7.50 in one day. After the initial jump, it usually pulls back before making another move. Identifying these pullbacks is key. I use a trading platform called Day Trade Dash, which I developed with my team. This software includes scanners to identify stocks that show the highest potential for big moves.
Momentum Cycles
Market momentum often comes in clusters. For instance, I noticed a pattern in my February trades. One day, I made $60,000 to $70,000 in just six days (Results not typical). The momentum started with one stock making a massive move, catching everyone’s attention. Once traders spot such moves, it ignites a chain reaction, creating more opportunities. But remember, once the initial excitement fades, there can be a big sell-off, so stay cautious.
Example of a Micro Pullback Strategy
A great strategy I use is the micro pullback. By focusing on 1-minute and 10-second charts, I can catch quick pullbacks during a bigger move. For instance, with CYN stock, I saw a quick pullback at $5.20 and jumped in, riding it up to $7.20. Knowing when and where to enter makes all the difference.
Final Thoughts
Momentum trading offers exciting opportunities if you know how to ride the waves. Today’s experience shows that with the right tools and strategies, I can make the most of volatile markets. Remember, day trading can be risky, and my results aren’t typical. Always manage your risk, and consider using a simulator before putting real money on the line. Happy trading!
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Warrior Trading was founded by Ross Cameron in 2012. Today Warrior Trading is a thriving community of thousands of day traders learning to trade under the curriculum designed by Ross
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