DAY TRADING STRATEGY DISCUSSION: RED TO GREEN!

Hello everyone and welcome to THEFREEDOMGRIND blog, all things stock/day trading! This will be a new set of articles we will be doing here about day trading strategies! This article will describe the open bell strategy most know as the Red to Green move! This strategy takes some confidence, because you are essentially buying the most volatile dip!!

This strategy, well, to me there really is no such thing as a strategy. There is just the trader and his/her experience, so in this discussion I will be sharing my experience with all of you. Day traders are up early, maybe an hour, hour and a half before the opening bell at 0930 AM EST. We are up scouring the market for stocks that are worthy of our attention when the market opens. in many cases we will pull 5 to 10 stocks aside that we suspect will be worth our while for the trading day. Sometimes the stocks that had the most promise in our minds immediately sell off right at the open, and in many cases this presents an opportunity. Let’s look at Fig 1 as an example.

FIG. 1

The chart above shows the Stock RBZ on April 26th, 2019. The lighter grey portion of the chart shows the Premarket. The green candle circled in blue is the very first 1 min candle of the open market session. In Fig. 1 the green candle has a very long green wick on the bottom, because this candle was originally a red candle. This chows the price dropped all the way to $7.45 cents at the open, but then quickly squeezed all the way back up to $7.99 cents. That is over a $.50 cent push to the upside within the first minute of trading. This is a very good representation of a Red to Green move. The candle was red at first, and then quickly turned green. Let’s look at another recent example in FIG . 2 below.

FIG. 2

This chart shows a red to green move but not on the same candle. This is the Stock ARCI’s 5 minute chart on April 25th, 2019. This stock had a dip right out of the gate to about $7.60 cents. The very next candle is green and pushes all the way up to over $9 dollars. A gain of over at least $1 per share within the first 10 minutes of trading.

Now, let’s have a look at a failed example in FIG. 3 below.

FIG. 3

RWLK ended up going red to green, but the resolve wasn’t a great one. At open the price dropped from $3.75 cents all the way to $3.43 cents. It then only pumps back up about $.10 cents. Technically this could have been a profitable trade but only just. After the price drops at open, it consolidates at the low and does not resurge to the open price and instead trades within a $.10 cent trading range for the entire intraday trading session.

Things to look for when trying to decide whether or not you may be looking at a red to green move. Firstly you should understand Level II. Level II is the order book, and will show you if there are other buyers buying in at the low. Volume is also an important element in this trade. Is there a surge of volume on the dip along with the buyers on the bid. This happens very quickly so practice looking at these trades and understanding both the Level II and volume before trading with real capital.

If there are any particular thoughts any trader has out there, let us know what you would like to discuss in our comment section below.

Here at The Freedom Grind, we love to talk about the market, and help in any way to make anyone/everyone a much more efficient Trader!! To support our operation Hit the LIKE button at the bottom of the page! If you would like to be notified when The Freedom Grind posts, hit the FOLLOW button and receive an email whenever we post market related news, our trades, and market analysis!

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