Technical intra day trading strategies based on chart patterns are profitable option to trade in this very short-term time frame. They generate nice returns when mastered.
Double tops, bottoms and flag chart patterns are an examples of these profitable chart patterns for daytraders.
Double bottom intra day strategy example
Apple shares with stock market ticker AAPL are a popular symbol used in intra day strategies today (2012). The stock is quite volatile and offers wide trading ranges that can be used for day trading profit opportunities.
Here is a typical example of a classic double bottom chart pattern situation that led to a profitable trade.
AAPL made its first significant bottom during the morning session and then again during midday. It was able to completely retrace this second down leg and break above resistance during afternoon hours.
The setup for this trade is to enter the trade above the 556 resistance level with a stop at 553 or so. The expected resistance area near 564 should represent the target area.
The trade developed well. The very important point for profitable results of intra day strategies is to have good trailing stop strategy. Moving stop loss as trade develops in your favor helps to handle your emotions and the trade results as well.
Flag chart pattern intra day strategy setup
The classic flag chart pattern is very usable for intra day strategies. It is often found during strong trend days. It is a continuation type of pattern. It defines a period of a rest after the first leg of trend move and expects that the next leg is going to be established.
This live chart from my daytrading software – Esignal – shows how well-developed downtrend from the morning session is followed by a rest period during a midday. It is typical for mid-day hours that there are not many significant moves in this time.
The price finally broke down from this flag chart pattern and started the second leg of the downtrend move. The exit was made using a trailing stop loss order method in the 132 USD area.
As you can see, trading classic chart patterns has its validity for intra day trading strategies as well. The simple price action accompanied with technical analysis of candlesticks and classic chart patterns offers trading opportunities every trading day.