day trading: the best advice I ever got

When a new trader comes into the stock trading business they very often have the misguided view that you have to “be right” to make money. As a day trader your goal is to make money from very short term price fluctuations. The term day trader itself implies that you will limit your profits. You have chosen to not expose yourself to over night risk. There is nothing wrong with this, you have a plan thats good.

The part of the equation you must be very focused on is making good money when those short term oopportunities present themselves. You must be ready. So wile you are trading in this short term window you must manage share size aggresively all day and every trade. Day trading is not a passive activity, you must be procative with share size on every trade.

What was the best advice I ever got? “Have the right share size at the right time.” Push your share size on good trades and be very procative cutting back share size when the trade stalls out or does not do what you expected in a reasonable amount of time.

Until next time Have a great week.

http://www.keystonetradingconcepts.com/keystoneplatinum.htm 

stock trading: follow the money

When short term trading for a living it is imperative that you keep on top of the strongest and weakest sectors. Your objective is to be involved in the most recent order flow. A traders job is to identify accumulation or distribution by institutions and then trade the ensuing short term momentum. When you get good at spotting these footprints you should be able to ride those trends for easy profits for a few months.

A good example of this is money was flowing out of the financials, the downtrend was obvious and the shorts were a piece of cake. Since January however the industry has been a very difficult read while oil services and technology has been hot and order flow much easier to read.

Sometimes as a full time trader it is easy to get comfortable with a stock and a particular sector and that is good. You will know when to push your share size. However we recommend that you keep an open mind and follow the strongest and weakest sectors during the day and especially at the close every day. You will see a pattern emerging weekly as the same industries appear over and over. it may give your trading business a nice boost of potential opportunity. This is the same method we teach in our Keystone Platinum program.

day trading: keeping busy

The market since Jan 08 has not exactly been on fire. The majority of my friends that trade stocks for a living have all said the same thing, “gotta grind it out right now.” Ok so that being the case what should a new trader be doing while the market is in a funk? Of course new traders are hungry to place trades and earn enough money so they can quit their night jobs, but what are they supposed to do when literally nothing is obvious for hours at a time?

Ask questions to the senior traders or mentors you have. Cycle through stocks or sectors you normally don’t trade but see if you can spot order flow. Spend time looking at price action, what is the phase you are in? Trend or pause? Are you in break out mode because you are consolidating or are you trending?

Look for swing trades. Look at daily charts and see if any swing trade from last night followed through. If it did could you have built a nice position that you could be sitting on right now?

The point is this. Do NOT sit there bored complaining the market isn’t moving!! You should be at your desk at least 8 hours every trading day, use it wisely. Use it to learn. Remember a very important fact that most people in this industry have a hard time understanding, you are not being paid for your time. You are not being paid dollars per hour by the market. You are earning a living for your skill as a trader.

We are always looking for new talent to trade our capital. If you think you have what it takes to trade as a professional trader send us an email inquiry info@keystonetradingconcepts.com

 

day trading: trading with urgency

When day trading for a living it is crucial you understand that you are trading for the month, NOT by the hour. You are not trading time for money with the job market, you are using skills to earn money from the stock market.

It is imperative that you get out of your head the result of any one particular trade. If you manage risk properly (translation: keep small losses small) and internalize the fact that your number one job is to preserve capital for the opportunities that “line up” so you can build a position as it moves in your favor.

GET OVER TRADING TO BE RIGHT! GET OVER IT NOW OR YOU WILL NEVER MAKE IT AS PROFITABLE TRADER. Your job as a trader is to manage risk. Taking losses is a HUGE part of the business. Get comfortable with it.

Whats the big deal about taking a bunch of small losses? Stop whining your timing is off! Small loss, small loss, small profit, then one big trade. thats the reality of trading.  Keep yourself in the game while you are gaining experience. Thats how a professional makes a living. Anyone who tells you they always make money is lying. Trade with a sense of urgency while managing your losses. Trade as if you must pay your bills from the first month of trading profits, that means trying to NET money. That means preserving capital.

Preserving capital is not trading scared. It is smart business. The market offers abundant opportunity for you to make a wonderful living as a trader, your job is to make sure you are in the game long enough to gain experience and an understanding of those opportunities to increase leverage.

day trading: taking whats available

It would be great if every day was a “buy at the low of the day and sell at the high 6.5 hours later or sell short at the high and cover near the low” type of day. Unfortunately that is just not reality. The market as a whole has been basically in a trading range since the beginning of the year (yes I know you can point to one or two commodity or oil related sectors).

As a trader who actually earns a living from the markets you should know if you are trading for short term moves or waiting patiently for an obvious trend to develop where you can build a position and hold it for a few hours or days. It is difficult to switch from one to the other on the fly. You can’t be a power hitter and a singles hitter, it doesn’t work that way.

However if the trend or better put, lack of trend is persistent over a prolonged period of time you may have to adjust to taking what the market is offering. During a trending evironment you should be trading less shares expecting volatility which means you will need to give your stocks some room to breath for the “bigger move.”

During a range bound environment you should be trading more shares per trade for a smaller move with very well defined stop loss areas, there will be no working an order. This may not suit your personality to trade these smaller moves, thats fine but remember you will need to be very patient waiting for a trend. You can take what the market is giving or sit back and wait for the conditions to match your trading plan.