1.) If the lead stochastic crosses over the 20 band consider this a possible buy signal, and if it crosses below 80, then it would be a sell signal.
2.) Use several charts in different time periods for each stock you are trading. 60, 13, 8, 3, and 1 minute charts will enable you to see the bigger picture. If the 60, 13, and 8 minute charts are in an uptrend, look at the 3 / 1 minute charts for an entry into the trend, such as when the lead stochastic moves up from the 20 band. Don’t fight the trend of the longer time frames, but if your trade is going against the major trend, be aware that you won’t want to stay in it for too long.
3.) If you are new to stock trading, start with low lots of shares such as 100, and avoid jumping in with orders for 1000+. A trade with 100 shares going against you is psychologically easier to take than one with 1000.
4.) Be wary of making trades during a consolidation, which can be indicated by flat or nearly flat 5 and 15 period moving averages. It is best to make trades when the stock is in a trend identified by higher highers and higher lows for an uptrend, or lower highs and lower lows for a downtrend. A strong trend should show a wide channel between the 5 and 15 period moving averages.
If the price is consolidated into a tight range for the past several bars, be aware that a breakout may be triggered when the price moves above or below the highest/lowest values. You can either enter a trade at the breakout price as it happens, or wait for the first wave to complete and the price to pull back close to the original breakout price.
5.) Know where your exit points in the trade will be, including your stop loss value. It is important to take losses and not let a losing trade run away while you hope it will turn in your favour later on.. it might not.
6.) If trading NASDAQ stocks, be aware of what the futures are doing. The current March contract symbol for the Nasdaq Emini 100 futures is NQH08 / NQH8 depending on your broker. Stocks usually move with the futures. It is generally a bad idea to short a stock if the futures are in a strong uptrend, and vice versa for going long.
7.) If the futures are in an uptrend, but your stock is moving down this could signal a possible explosive move down when the futures start to go back down again. The same applies in reverse for moves up.
8.) Look at the previous days trading range by subtracting the high of the day from the low of the day. You may want to add this into a stock scanning program so you can find stocks which had a range of $1+ for example. Stocks with large ranges will give more opportunities for larger moves for you to capture compared to stocks which only fluctuate by a few cents each day.
9.) Watch out for stocks that have a significant gap at the open, either up or down. Stocks that have gapped are likely to have good volume and swings in price, presenting good trading opportunities. A gap is defined by the opening of the bar being greater or less than the close of the previous bar. If a stock closed at $85 yesterday and opened at $88 today, then it has gapped up by $3.
10.) The Asian and European markets can be used as a possible guide to get an idea of which direction the US market is likely to go in. For example, if the Nikkei is down 3%, the DAX is down 2.3% then there is a strong possibility the US Futures and stocks will end up down overall. The US futures will have been trading down in their overnight session with Asia/Europe aswell, so there could be an immediate rally at the 9am open before moving down further.
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These are excellent tips for the beginner investors.