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Momentum trading: using pre-market trading and range breakouts

  • By Ken Calhoun,
  • Active Trader Magazine
  • Technical Patterns
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One of the primary challenges traders deal with is knowing when the markets are volatile enough to enter intraday and swing trades vs. when to avoid trading. Obvious breakouts often occur too late in the trading day to generate useful buy and sell signals; what traders need are early indications of the likely intraday trend and a way to identify the most favorable conditions for follow-through. Fortunately, pre-market trading activity and breakouts of the previous day’s high or low that occur in the broader market can give an early indication of when, and in which direction, to trade during a trading session. The best trading opportunities occur on days the market is moving outside the prior day’s range and in the direction of the pre-market trend. Read on to learn more.

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Article copyright 2011 by Active Trader Magazine. Reprinted from the April 2010 issue with permission from Active Trader Magazine.

The statements and opinions expressed in this article are those of the author. Fidelity Investments cannot guarantee the accuracy or completeness of any statements or data.

1.Active Trader Services are available to investors in households that place 120 or more stock, bond, or options trades in a rolling twelve-month period and maintain $25K in assets across their eligible Fidelity brokerage accounts. 

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