Day Trading

Day Trading – Make it A Game

Day Trading is by far the hardest form of trading. This is due to the speed at which a trader must make decisions. In day trading, there are a number of factors, which will prevent a trader from entering the zone. Below is a list of villains that keep cash out of your pockets.

Overtrading

Overtrading can mean many things to many people. To some 3 trades is too much, to others 10.  Greed will always flow through your veins, but you must remember that with each new trade comes risk. Limit the amount of trades you make per day and instead focus on the quality of the setups.

Sabotaging the Trade

Day Trading consists of mainly choppy moves with the occasional big winner. Traders will often be worn down from the constant ups and downs that psychologically a trader is unable to capitalize on the big winner.

Below is my VRTX day trade from 5/21.  The stock had a silly green bar on the 5-minute chart.  On first glance it looked like a hammer, but the wick was so ridiculous, you knew that the longs were asking for it.  I took on a short position in anticipation of this level breaking. 

The below video is of my 5/7 JCOM morning breakout trade. We have been working on developing sound money making rules for trading and JCOM is a clear example of this system in real-time. JCOM had all green bars in the morning prior to retesting the high for the day. This gave us confidence in a long position, as odds where in our favor that the stock would not only test its morning high, but likely push through it.

The key to day trading, which I have to remind myself everyday, is that less is more. The clip is roughly 3 minutes and I hope you find it helpful.

Good Luck Trading

Overview

Momentum traders are truly a unique group of individuals. Unlike other traders or analysts who dissect a company's financial statements or chart patterns, a momentum trader is only concerned with stocks in the news. These stocks will be the high percentage and volume movers of the day.

Times They Trade

Momentum traders will limit the times they trade to the first and last hour of the trading session. This is due to the increased volatility that takes place during these two time slots. The most dangerous time zone for momentum traders is during lunch (12 - 2pm), where volume dries up and the moves are choppy to flat. Many seasoned momentum traders have learned to respect this time zone as a result of a of a trading blunder.

Today I traded AU Optronics (AUO), Jabil Circuit (JBL), Ryland Group (RYL), Cameco Corp (CCJ), for a total gain of $24.80. I am beginning to notice that stocks which clear Fibonacci levels intraday have a greater success of going in your favor. So, I am going to draw retracement levels, just to see what is in play and maybe it will increase my win/loss ratio. I am also planning on splitting my positions up in to thirds, in order to scale out of the market when I am in a profitable trade. Check out my CCJ (last trade in the video) to see how I was able to scale out of a winner.

I put on a good number of trades today, but I was unable to have a breakthrough. I have to work on allowing my winners to run, if I plan on making real money in the market.

Today I had data issues first thing in the morning, because BIIB was moving so fast on the tape that it locked up my machine. I was able to recover but it was after 9:50, which normally I have already begun to identify my setups for the morning. I was able to rebound from these technical issues and still finish up for the day. I am beginning to avoid big losses, but I feel trapped in my ability to have a true breakout day. Now this is of course all my doing. I need to apply more focus in order to realize my full potential of my current level of trading experience.

Today was good because I felt in synch with the market. I have started to use the 100 tick chart to better manage the really volatile stocks as the 5-minute chart often lags the price movement. I have begun to get on a bit of a streak so I will need to keep this up for the next month or so, in order for me to begin using more money per play.

I put on a last minute trade on JPM near the end of the day after the fed announcement, but what looked so good ended up rolling and taking me for an end of day ride. I have not broken my golden rule of taking a hit greater than 1.5% over the last few weeks, so I am extremely pleased.

Could have been a big day for me, but I exited two trades a bit early. The market was up today, but it felt flat throughout the morning. Trading will be tough this week due to the quiet period before the interest rate announcement.