I’m always searching for great traders and to learn a little about their strategies. Recently I had the opportunity to do a short email interview with a trader from South America who had made $50k in just one month.

He considers himself a trend and basket trader. Here is how it went:

Q: Can you tell me alittle about your trading strategy?

A: I am scalper or sometimes position day trader so I like looking trend stock and add size (pyramid) but when I find a good trend day I am a basket trader.

For example, I will be buying a basket of serveral stock of 100 shares and if it goes good so i will buy other 100 …..

Q: Lets say you find a good trend and you buy a bunch and it goes up and you buy some more, when do you feel like you will take profits and if it drops where do you take losses at?

A: I like technical analysis so I look chart SPY or Dow and trade with them. Sometimes if its strong day I let it run till the close , or sometimes I look for target level of spy.

For Stop I use technical, sometimes I have an amount dollar of stop or level of spy or dia.

The last month some days I bought or sold baskets the last 10 minutes of market, strong or weak day.

For example a basket of 60 position of 600 shares.

This lesson also points out basic support and resistance strategies. As with any type of charting strategy it is not exact science but the use of it can increase your probabitlity for profits.

This is sometimes called the box strategy which was made popular Nicolas Darvas in the Book – “How I Made $2,000,000 in the Stock Market.” written back in 1961.

If you view the chart below on ANR you will see that it bounced off the $14.50 level 3 times and moved up to a resistance of $22.50. Obviously when it happens the first time you won’t know that these are support or resistance levels until it happens again.

After the third bounce it’s a good chance it will eventually test the top resistance level again. If it breaks above the $22.50 level, this an be called a break out. To play this correctly you would have to give yourself alittle room on the down side.

1. Enter the stock before it makes the second bounce and give yourself a stop loss of atleast .50 in this case incase it doesn’t bounce exactly off the first support level.

2. Enter the stock after the second bounce and it is headed back up with a stop loss at the bounce level.

3. Exit the stock after it test the top levels and failed to break it.

4. If the stock breaks the top risistance and continues upward, use the resistance level as a stop loss, or use a trailing stop if the stock continues much higher.

If you’re a day trader there are certain times in the day that give you the highest probabality trade as demonstrated with the two charts below. The first is 30 after the market opens, if there is a reversal in trend it will most likely happen here.

The second is at 12pm EST, this is when traders go to lunch in NY so the market will slow down, trade sideways or trend down. The 3rd reversal point is at 1:30pm and you can see from the charts below they turn exactly at this time. These patterns are not written in stone but they happen very often.