c03 JWBT016-Busby September 30, 2008 14:23 Printer: TBD
Opening the Vault with Key Numbers 41or track them via some other charting software. Winners have some system
in place for tracking key numbers.
For a day trader, a short-term view is critical. A day trader is making
short-term plays and needs to get it right and get it right quickly. I need
to know the key numbers nearest to the current trading price on a daily
basis. Each morning, I start by taking note of current key numbers. Where
did prices open yesterday? Where did they close? What was the high for
the day? The low? What price points or numbers does the market return
to over and over again? These are the numbers around which I plan my
strategy. Every day, I spend a few minutes before the New York Stock Ex-
change (NYSE) or the Chicago Mercantile Exchange (CME) opens analyz-
ing key numbers and forming my daily strategy. Never trade without hav-
ing a long-term, intermediate-term, and short-term picture of the markets
in your head. Trading without that knowledge is like throwing a dart across
a crowded bar with a blindfold over your eyes. It just makes no sense. You
are trading blind.
Once I have identified the level of support (the price floor), the level of
resistance (the price ceiling), and pivotal points where prices may reverse,
I am able to identify potential buy or sell areas. Never go long just below
resistance. Obviously, if the bears come out in force at that price, you do
not want to be long and sit foolishly in the line of attack. Wait for resistance
to be broken before taking on a long position. Once that happens, the odds
are more in your favor that you will be able to ride prices up to the next
resistance point. Likewise, do not go short just in front of support. Wait
for support to be broken so that you are able to ride prices down to the
next support level. That seems very simplistic, but many traders fail to use
support and resistance numbers. They buy just before prices tank or sell
moments before a rally. That means that they buy the high and sell the
low—not what you want to do in most market conditions.
Also remember that there are many key numbers associated with a
product. Some key numbers or price points are stronger than others. Again,
studying a chart or observing and recording numbers over a period of time
should give you the information needed to identify and use key numbers ef-
fectively. Once that knowledge is gained, it is a powerful tool for unlocking
the secrets of Wall Street.Opening Prices for 2008
S&P E-mini 500 Futures 1478.75
Mini Nasdaq Futures 2111.25
Mini Dow Futures 13334.00
Dax Futures 8105.50
Apple (APPL) 199.27