One of my favorite trades are Over Night Holds(ONH). Sounds like a swing trade but it's NOT! It's more like a momentum(MOMO) play. I am looking to stocks that follow thru the following day. If I short Over Night I am looking for a Gap Down and if long Over Night i am hoping for a GAP UP the next day. I am very very picky and only demand THE BEST POSSIBLE TRADE i can find, if i don't find anything, then i will DO NOTHING.
Things To Look For:
1. NEVER hold overnight a stock that reports earnings after the close or in the morning. Be AWARE of earnings and avoid them like the plague.
2. Always be on the look out for hot sectors, short squeezes, highly shorted stocks & momo stocks.
3. HIGH OF DAY (HOD) and LOW OF DAY (LOD) closes. I literally wanna see the stock close on it's HIGHEST tick of the day for long positions and LOWEST tick of the day for short positions.
4. VOLUME, VOLUME, VOLUME! I wanna see volume and lot's of it. Smart money is always most active near the close and if you see heavy volume going into the close, that should tell you something. It ain't mom and pop shuffling shares around. It's THE BIG GUYS squaring off their positions.
5. Always Trade in the path of least resistance of the market. If the market closes on it's lows on strong volume, then you want to take Short Over Night Hold(ONH) Candidates, not long positions (for this strategy)!
6. DISCIPLINE!!! To take a loss if there is one if the stock doesn't do what you expected! GET OUT! Have faith in yourself!
7. You wanna BUY/SHORT right before the close after you are confident you have made the right decision and you have found a winner.
That's it. It's sounds simple and you'll find out it's easier said then done. hahaha! Just needs a little practice and eye training.
Here's my results for Over Night Holds For the MONTH of MAY and JUNE: These results reflect if my real Over Night Results If i held for 30 minutes after the open the next day after initiating an Over Night Hold.
|May||O.N.H./30 Min.||June||O.N.H./30 Min.|
As you can see this strategy works but you need to know what to look for, you are not gonna get them right all the time but the results speak for themselves and you have to practice and learn what to look for. This strategy is just ALL trading strategies, it requires THE DISCIPLINE TO SELL if you DO NOT GET THE GAP. If the stock doesn't do what you expected, then get OUT immediately. Take the loss if there is one and have faith in yourself to spot a winner on your next trade. DISCIPLINE!!!!!!!!!
A Picture is worth a thousand words: Look at the charts above and train your eyes to spot this pattern and behavior going into the close.
Check Out the Charts ABOVE: I put two charts for each stock. First chart shows what the stock looks like on the 5 min. charts and the second chart shows what the stock looks like on the daily chart when it first caught my eye for an ONH candidate.
Hope this helps you in your trading.
and remember, you make your own trading decisions.