Archive for August, 2007

stock trading: summer time volume

August 20, 2007 Leave a comment

We covered patience as a stock trader in a previous post, now we have the summer time volume kicking in for most of the day. Traders have been fortunate for most of the summer that there was amazing volatility and volume. I hope you were able to capitalize on it. Currently we are being very picky about when to be aggressive. It may be this way until September gets here.

Always remember you are in business for yourself. Its not always busy. You are here to make money for the month and for the year. Don’t worry if you have to pull it back for a week or two. Net profitability is your goal, do a little tape reading and pay good attention to the size of the prints. If they are sporadic and small, nothing is going on. Keep your hands off the enter button!


day trading: expectations

August 14, 2007 2 comments

When trading stock for a living you don’t need to know whats going to happen next to make money. However you do need some type of model for price structure. You need this so you can begin to form as many if-then scenarios as possible. The more high percentage scenarios you can create, the more trades you can take advantage of.

The successful progression we teach is to watch only a few stock, master the set ups in those stocks, increase your share size, then do it again adding more stocks to your list.

One of the simplest and effective setups to monitor for is a consolidation. A consolidation is a pause in a trend. No matter what time frame you monitir trades on, you should be able to find a consolidation which you can stalk. I say stalk because consolidations lead to trends. This can be done on a short term basis also. Yesterday was a very tight trading range, my expectation for today was not long or short, but breakout. I wasn’t going to guess, just sit back and let the natural price action of the market tell me what to do. Trend leads to pause, pause leads to trend. Pay attention 🙂

Categories: Market Set Up

swing trading: getting ready to short

Whether you are day trading or swing trading right now, you have to love this volatility. The extreme moves we are experiencing in both directions is perfect for short term trading. The market the last few weeks has been following a similar pattern on a daily basis, chop around the first 45 minutes find a bias and kick in the turbo boosters after 2:30.

This stock trading environment is heaven for traders who have experience and a plan. The traders who I can see on the floor of our NYC desk that are very frustrated are traders who don’t have a plan or a structure for price action. They view this volatility as “unreadable.” If you want ot join the ranks of experienced traders, sit down and write out a plan, have an idea of what price “should” look like so that when it presents itself, no matter how fast the moves, you will be prepared.

That being said, The 283 2.2% up move we had in the Dow yesterday is setting up a shorting opportunity for me. I will be looking for some follow through in price action to the upside today and maybe tomorrow. Once the upward momentum has subside I will look for sellers to take control again and join them on the short side.

Categories: Market Set Up

stock trading: Patience

August 1, 2007 3 comments

It’s very common for newer traders to come to the profession of stock trading for a living with the money mindset that they grew up with; that of getting paid dollars per hour. The harder you work the more you should earn. Unfortunately in trading this doesn’t work.  You are being paid by the month, not by the hour. As a stock trader, your job is to manage risk and leverage through the six and a half hour trading day. Your job is to find high percentage opportunities, the higher the probability the more leverage you should allocate to the trade.

Time after time we see new traders who feel like they “have” to be in the market at all times. Well the fact of the matter is that there is NOT something to do all the time, especially this time of year (middle of summer). You must also never forget that entering the trading arena means you are opening a business for yourself. You need to learn how to run your business in order to make money. That doesn’t happen overnight.

In order to succeed as a trader you need patience in the following areas:

  • waiting for a good trade
  • holding on to a good trade
  • developing your trading skills, learning from your mistakes
  • recognizing your own trading personality, scalp, momentum or trend trader?

Can you make it as a professional trader? I say absolutely! Just give yourself a chance, be patient.

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Categories: Beginner education