Mastering the Art of Day Trading with a Breaking News Strategy

Warrior Trading

What’s up everyone, it’s Ross Cameron, and I’m back with another blog! In the world of day trading, being able to swiftly capitalize on market volatility is more than just a skill—it’s your bread and butter. Today, I’m diving deep into a highly effective strategy known as the breaking news strategy. This method is all about leveraging the quick swings in stock prices following major news announcements. Trust me, in an arena where every second counts, understanding this strategy can be a game-changer.

Understanding the Strategy

To kick things off, let’s talk about the backbone of this strategy: identifying potential gold mines before making a move. It might seem like looking for a needle in a haystack with thousands of stocks out there. However, focusing on specific criteria streamlines the process:

Stocks on the Move: We’re looking for stocks that have already started their ascent, showing at least a 10% increase on the day.
Price Point: The sweet spot for stock prices is between $2 and $20. This range usually indicates affordability and higher potential for movement.
News Catalysts: The stock must have a newsworthy event causing its price to jump.
High Relative Volume: This indicates a significant interest in the stock compared to its typical trading volume.

Utilizing stock scanners is crucial here, such as the Warrior Scanners. They help filter through the noise to pinpoint stocks that match our criteria. Think of scanners as your radar in the vast ocean of the stock market, guiding you to where the action is.

Case Study: A Real-world Example

Let’s break down a real trade to get a feel for how this strategy works in action. QNRX was a stock that hit the news at 8 a.m. By 8:12 a.m., it’s up over 133%, and I’m locking in over $6,000 in profit. This example illustrates the power of reacting swiftly to breaking news. The stock met all our criteria: it was rapidly moving up, priced just right, had a compelling news catalyst, and showed a high relative volume. This combo is like hitting the jackpot in day trading. By keeping a laser focus on these elements, I was able to identify and act on this opportunity quickly.

Digging Deeper: Analyzing Charts and Level 2 Data

Before pulling the trigger, two things need a closer look: the daily chart and Level 2 data.

Daily Chart Analysis: This is about spotting key levels of support and resistance. You want to ensure there’s room for the stock to climb without bumping into major resistance levels.
Level 2 Analysis: Here, we dive into the depth of the market, checking the spread and the size of orders on the bid and ask. This info can hint at the stock’s next move, helping us decide when to jump in.

Scaling Up and Seizing Opportunities

With a few wins under my belt, it’s time to think bigger. Scaling up the share size carefully can amplify profits on strong stocks. This step is about leveraging my initial success to take on slightly more risk for potentially higher rewards. Of course, this can be a risky move. It’s all about finding that balance between caution and boldness.

Reflecting on Performance

At the end of the trading day, taking time to reflect on performance is crucial. Did we stick to our strategy? Could we have seized more opportunities or managed risks better? This introspection is how we evolve as traders, continually refining our approach for better results down the line.

Wrapping Up

Embracing the breaking news strategy in day trading is about staying informed, acting quickly, and constantly learning from each trade. Remember, day trading thrives on volatility, and with the right approach, you can turn this chaos into your playground.

And finally, never stop learning. The market is always changing, and so should we. Whether you’re a seasoned pro or just starting, there’s always room for growth. Keep trading, keep learning, and happy trading!

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Warrior Trading was founded by Ross Cameron in 2012. Today Warrior Trading is a thriving community of thousands of day traders learning to trade under the curriculum designed by Ross.