Already on ArticleSlash?

Forgot your password? Sign Up

Day Trading Strategies - Second Entries

 


Visitors: 263

In trading you may have heard the term, “Second Entry, " but you may not be quite familiar with its meaning. The term means that you have a second opportunity to take advantage of a particular trading setup, usually a chart pattern or other form of technical analysis pattern.

An example of a second entry would be if a stock was in a tight range for a reasonable time period and broke out of that range to the upside. If the fictional stock “ABCDE" was trading between $43.25 and $45.50 for the last 3 weeks and then a trade took place at $45.60, many day traders and “breakout traders" would start to buy the stock. The stock could run up to $46.00 or even higher, but after the buying frenzy subsided in this example the stock's price dropped BELOW the previous high of $45.50. Everyone who bought above $45.50 and held the stock is now holding a losing position, so many of those buyers would start selling to reduce the impact of their losses.

However the stock may reassert itself and begin its climb back up. If the stock's price dropped below the previous high of $45.50 for only a short period (a few bars on a chart, which could mean a few days on a daily chart or a few minutes on an intraday chart), “second entry" traders would purchase the stock when the price goes above $45.50. The psychology behind this strategy is that the short-term buyers and “weak hands" have higher odds of having been eliminated, so they feel that the “true" breakout can begin.

Many trend traders restrict their trades to those which failed the first time but quickly reasserted themselves to resume the direction of the initial move. As always, back-test any technical strategies, apply proper money & risk management procedures, and maintain proper trading psychology. Restricting your trades to second entries-only opportunities are applicable to swing traders, longer term traders, and day traders.

All standard risk, investing, trading, day trading, and financial services disclaimers apply to this article.

If you want more useful day trading stock tips, free articles, and useful day trading resources then you are invited to visit http://www.DayTradingStockTip.com

(372)

Article Source:


 
Rate this Article: 
 
Windows Registry Cleaner Removes the Outdated Entries
Rated 4 / 5
based on 5 votes
ArticleSlash

Related Articles:

Stock Trading Strategies - 8 "Whys" And 5 "Hows" Concerning Stock Trading ..

by: Abhishek Agarwal (April 01, 2008) 
(Investing/Stocks)

Forex Trading Courses and the Strategies Learned Need to Have a Direct Effect ..

by: William Alheim Jr (September 19, 2008) 
(Finance/Currency Trading)

Using Forex Trading Strategies to Eliminate Stress and Guesswork in Your Trading

by: Richard M. Davieess (July 29, 2008) 
(Finance/Currency Trading)

Forex Short Term Trading Strategies - Forex Day Trading Restrict Risk Build Big .

by: Samuel Leslie Berkovits (June 18, 2008) 
(Finance/Currency Trading)

Credit Report Entries – The Good and the Bad

by: Charles Essmeier (February 05, 2007) 
(Finance)

Four Approaches to Journal Entries in the Classroom

by: Don Alexander (August 07, 2007) 
(Reference and Education/College University)

Forex Trading Strategies How to Find the Best Forex Indicator in Currency ..

by: George Knoechel (June 18, 2008) 
(Finance/Currency Trading)

Forex Trading Strategies As Forex Currency Trading is Just About Managing Risk

by: Mikel Freije (September 25, 2008) 
(Finance/Currency Trading)

Why Waste Time on Forex Trading Strategies, When You Can Get a Forex Trading ..

by: Molly Jobs (June 19, 2008) 
(Finance/Currency Trading)

Windows Registry Cleaner Removes the Outdated Entries

by: Arvind Singh (July 27, 2008) 
(Computers and Technology/Software)