Chapter 1 – Intro to trading:
· We broker that fits you and can accommodate your day trading needs.
o Convenience does not translate into fitness ( sure traders, TD, Etrade, LS,ST)
o Think about cost, not just trading fees ( cost per trades) but also
§ Data fees – ( type of data you need)
§ Routing – ( routing plan)
◦ Margin accounts vs Cash accounts
o All day traders needs a margin account which gives leverage
o Do not use leverage – always trade within the cash limit
◦ PDT Rules
· 3 trades within a rolling 5 business day period if account is 25K. Do not violate, will translate into
o 90 trading restriction
o Account closure
o Bypass with/ 2 plus account or use Suretrader high fees – find work around.
◦ Leverage- Be careful cut losses quickly do not leverage.
◦ The process of opening an account ◦ Order Types (Limit vs Market) ◦ Routing Options & Fees
· ◦ Entering Orders
· ◦ Bid/Ask
· ◦ Level 1 and Level 2
Shows sellers and buyers
o Tape reading – to get better sense of market direction
o Use for market dept
o Watch for sellers and print
◦ Float ◦ Long vs Short ◦ Short Sale Restrictions
· Close market –Initial public offering
· 500K to 10 M – low float
· 20- 30 – Medium float
· Supply and demand impact for explosive moves ( D to D pockets – Momo strategy) and ( S cto S pockets) – short strategy
· SSR restrictions- 2.5 per stock shorting.
◦ Understanding the overall Market ◦ The Volatility Index
· Watch the spy and violate index- impact or little but meaningful
· Most violitle time frames
· 9:30 to 10 AM – most violitle
· 11-12 more calm
· 11:30 to 12 PM – risky.
· 2- 4 PM market closure
Market Sentiment and Voility index
· Reversals and trends – countertrend trades.
◦ Reporting your Trades
· Track your trades in tradevue and document setup, feelings and time frame cut losses quickly.
Try to be good at one strategy, than branch out
Gap and GO, Moentum and reversal startegies
Chapter 2 – Risk management
· Risk management is critical to long term success as a day trader. Without it, you will not succeed.
· An inability to Manage Risk is the leading cause of Failure as a Day Trader ( top reason 1 of 9 is successful)
Choosing Strong Stocks vs Managing Risk
· Choose the best stocks
· Set hart stops and keep losses low (important) 100 to 200 per trade. Cut it off.
◦ Profit Loss Ratios
· Aim for to 1 to 1, but mainly focus on 1/2 setups and set stops and limit closely.
· Always know what I am willing to loose
· Some times no trades at at all is okay.
· Put stats in your favor
Target Percentage of Success ◦ Personality test ◦ defining a strategy around YOUR personality
· What type of trader are you?
o Do you prefer to hold positions for several hours while thinking about the trade and analyzing the potential?
o Do you prefer to enter a position, set your stop, and walk away so you don’t over trade it?
o Do you prefer to trade with small amounts of capital and let the trades work for a longer period of time?
o Do you think holding some positions overnight might be acceptable for you?
o Are your computer skills leaving something to be desired?
o Do you trade via Mobile or Tablet while at work
· The above will help you decided and understand what type of trader you are ( Long or short Bias intraday or SWING or long term trader)
◦ Balancing your Risk
· Work on Position sizing 1000 share per trade is a good start and cutting loses quickly- keep a 5 cent stop – enforce this.
· Be consistent
· Trade A –quality setups
· Building a Cushion- be careful always try to build a cushion first so trade the best setups so you
· Do not start the day with a losing trade.
· Use mental stops
· Think about risk.
· Be good at being wrong
o Wining is not guaranteed be careful
o Take small losses
o Position is a huge thing push it
· Take control of losses and consider it put of business