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How to Beat the Market Makers at Their Own Game: Uncovering the Mysteries of Day Trading by Fausto Pugliese

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CHAPTER 12 Making a Game Plan

Now that you know how to spot the support and resistance levels of stock, you can chalk out a game plan. After all, the point of this book isn't to teach you about the markets and charting; the point is to teach you how to become an exceptional and successful active trader. Fortunately, the knowledge you've acquired so far gives you all of the information you need to do just that. In this chapter, we're going to put all of this information together into a practical example so you can see exactly how you make your day's pay as an active trader.

In Example 1, you have identified Instinet Group Inc. (INGP) as a possible stock to trade and run it through the nine rules to determine that it is indeed tradable. Furthermore, you've taken a look on Nasdaq OMX (www.nasdaqtrader.com) and discovered that J.P. Morgan Securities LLC (BEST) is the ax for this stock. Now you're ready to get to work. Figure 12.1 illustrates trading for the day.

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FIGURE 12.1 One Minute Bar Chart

The next step is to determine the support and resistance levels for this stock. If you mentally draw a trend line through the $6.70 level, what do you see? Does this look like a support level to you? It sure looks like one to me. Just before 11:00 A.M., the stock hit $6.70 numerous times and immediately bounced back up. Also notice that before 10:30 A.M., the stock hit a major resistance ...

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