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Archive for July, 2008

day trading for a living

Day trading for a living. Just to say I day trade stocks for a living sounds very cool. No nights, no holidays, no weekends and no boss to answer to not to mention the unlimited potential. I can honestly tell you that when I tell someone at a party on the weekend how I earn a living I always get the same stare of wonderment!

Let’s face it trading for a living is sexy. I wanted to play baseball for a living when I was a kid. I lived and breathed being a catcher for the NY Mets. I have a better job now, one that gets better with age! I love the challenge of me against me every day.

Most people who are not traders believe it is you against the market but its not. If you have a system you believe in it’s just a matter of coming in every day and executig the system. Can you follow your own rules? Do you even have rules? I will tell you that if you don’t have rules commited to paper you have no shot at succcess as a trader.

Why do you need to write them down? It is simple you must know WHY you made money. If you don’t know what you did you will never be able to repeat your success. We have a terrific group of new traders that have joined us in the last month and they are fueling our desire to be better mentors. (not that we needed help at being fired up every day!)

We are always looking for new talent to join our team. If you think you have what it takes send me an email.

prenzulli@keystonetradinggroup.com

http://keystonetradinggroup.com/

3 day trading tips you can use today

 
Keep it simple to earn consistent money. Sometimes in this internet age it can be very easy to have information overload. When you have too much to choose from it can feel like you have all the tools in the box but no idea how to use them.
 
These tips are a few of the key ingredients of our trading plan.
 
Share size comes last!
Too many traders initiate trades with the same share size all the time no matter the volatility of the stock or the market conditions. Your first consideration should be how much I am willing to risk per trade; this is a specific dollar amount. Next decision is the stop loss based on charts or any other criteria you use. Be sure to allow the stock to sufficient room to breathe, never place your stop at the exact number. When you know risk amount and stop loss parameters, then you allocate shares.
 
Be prepared for the open.
You must have a prepared plan before the market open. You must know which stocks you plan to trade long and which ones short. It amazes me how many traders I mentor that basically “wing it” the first 45 minutes. On top of that which of the stocks in your morning list are the cream of the crop?
 
If you have a list of 10 stocks which are trading in sync with the market? Are any of them consolidating the last few days that would setup an easy breakout trade? Those are the ones you can’t miss. Order flow is easiest to read in the morning and you should get solid follow through. Take advantage of it by being ready. Our traders have the first 60 minutes mapped out for them; it is just a matter of reading the order flow letting the market play itself out.
 
Have an idea but not an opinion for the day.
What is the difference? If you have an opinion you will only see what you want to happen, or to put it more bluntly you will only see one side of the market. The side you want, the side that validates your brilliant analysis. When this happens you will be caught off guard if it doesn’t unfold the way “you knew it would.” That translates into bigger losing trades.
 
If you have an idea you have a bunch of “if-then” scenarios mapped out in your head for both your stocks and for the market. You have a game plan for what “should happen” but you will trade what actually does happen. I know this sounds insanely obvious but I can tell you most plans go out the window as soon as the bell rings. Remember having a plan and following it is how you repeat success.
 
One last point, on any given day you may have 4 stocks to short and 6 stocks to go long. It may be common for 8 out of the 10 to not act according to plan. That is fine let those trades go, you only need those two to play out to make a great living.

http://keystonetradinggroup.com/concepts/keystoneplatinum.htm 

making confident day trading decisions

July 19, 2008 1 comment

Can you make a persuasive argument for your trades?

A good portion of my mentoring is assessing whether or not a trader is improving at making good decisions. You would think that the first thing I would look at is a traders P&L. I can understand why someone may expect that to be my top priority but as a veteran trader I can tell you that P&L alone does not always tell the story.

This article was inspired by two incidents that occurred this week. One particular day last week was a very busy trading day. If you know anything about myself and Erik we will be the first ones to tell anyone within shouting distance if it is a tough day to trade or if volume is very light to do nothing or at the very least cut down your share size.

Well on this day it was a very good day to trade. We had a trader who was new to the office listening to me throughout the morning telling everyone to get busy. It was one of those days to “belly up to the bar” and get involved. It was a morning to make some good money. After lunch Erik called him into the back and told him you can’t be passive on a day like today, you have to sit on the edge of your seat and trade like you expect to make money.

What was his response? He sent an email after the close telling us he wanted to trade from home. Why would he do this, we were mentoring him and promising to help him improve? Believe it or not this is not the first time we have experienced this. He didn’t want anyone to critique his trading. Now mind you this is NOT an experienced trader who is earning a consistent living and he is trading OUR money. His first day trading from home I reviewed his trades for the day and his decisions were horrible.

I emailed him and asked him to send me his journal for the day so I can se what his thought process was for the days trades. It is 10 days later and I still have not heard from him. He can’t back up his decisions. He can’t make an argument. If you aren’t willing to learn, you will never improve.

The other situation happens when I bring new traders into the back room for small group mentoring. We mentor everyone on the trading floor and online but a trader can make themselves dissappear by being quiet. When I bring them into “the SHED” I force them to talk me through all of their possible trades they want to make.

When you are in The Shed, there is nowhere to hide. You must make a case to me like you are on trial. I force you to get good at making good decisions. It amazes me how often Erik and I hear “I was hoping, I don’t know why, I wasn’t paying attention to that, I didn’t see that support.”

Picture in your mind the next day you are trading. Visualize yourself in a room full of 100 traders. Now picture that you are required call out every trade you are considering to the whole room for judgement. How many of your current decisions would you call out proudly and loudly!?

Use this visualization technique to improve your decision making ability and I will guarantee your P&L will become very consistent.

Take my advice, don’t hide behind your monitor and try to figure it out on your own…..ask a question!

Pete

day trading advice from Tiger Woods

What advice could Tiger Woods possibly have for you as a trader? What could he possibly know about hitting a bid or getting out of a bad trade? When has Tiger ever felt the pressure to pay the bills with his next trade?
 
I would hope it is safe to assume that anyone reading this is savvy enough to know who Tiger Woods is. He is the worlds #1 golfer by a mile and he is projected by Forbes to become the first billionaire athlete by 2010.
 
If you ever hope to be successful, and hopefully enormously successful you absolutely positively need to take the advice I am about to give you. Study successful people. Not just successful traders. It doesn’t matter if it is a grand master at chess, a violinist, a professional athlete, a dancer or a cook or a single mom raising 6 kids.
 
I am not talking about learning what they do; I am talking about listen to what they say about how they got there, what kind of effort it takes to get there, and what it takes to stay as one of the best. I am sure you want to succeed as a trader. I am sure you want to earn more money than you ever thought possible. I am sure you “want” it. Well I am here to tell you that wanting it is not enough, sorry to throw cold water on your face but it’s the truth.
 
You need a burning desire. How do you know if you have burning desire? Are you willing to get a part time job while you are learning to pay your bills? Do you go to the office every day early and stay late every day to ask questions of those who are succeeding? Do you faithfully keep a journal every day?
 
When you were a kid did you practice because you wanted to or because you had to? Winners never have to be told to try a little harder next time. Winners never have to be asked to stay late to practice.
 
Do you go to the bookstore in your spare time or do you watch 6 hours of TV? Let me tell you a universal truth, how you spend your spare time is how you will spend your future.
 
One of the best places to read about success on a daily basis is Investor Business Daily, the “leaders and success” page in the front section. I have a shoe box full of these articles that I go back to once in a while to get re energized.
 
So what does all this have to do with Tiger Woods? In case you aren’t a golf fan, last week he won the US OPEN (one of the 4 major events in golf) with a torn ACL ligament in his knee and two stress fractures in his other leg.
 
Although that was impressive, that’s not the point I wanted to make. I was watching the interviews with him on the Golf Channel after the match and here is the quote that struck me. “I basically spend the entire tournament trying to minimize mistakes until a few good opportunities present themselves.” To the casual observer this probably didn’t mean that much, to me, well I almost fell off my chair.

Tiger Woods just explained how to be a successful trader. Tiger Woods says the secret to his success is minimizing mistakes. Spend your day following your plan, and a few trades will end up presenting an opportunity for a better score (profits). In the mean time as the day unfolds just minimize mistakes and stay in the game. Pay attention to those who are successful, if you are aware you will get clues.
 
One last quote to leave you with, one of my favorites. It was to Maria Callas, the most renowned opera singer of the 1950’s. A young aspiring singer walked up to her and said “I would give my life to be as good as you.” Callas casually looked at her and responded “I already have.” Think about it that is pretty profound.
 
Pete Renzulli is a full time day trader, trading author and mentor located in NYC. To receive his weekly newsletter “Keystone Trading Journal” and the valuable report “two simple secrets for finding the easiest stocks to make money in each day.” click here

day trading for bigger gains

July 2, 2008 2 comments

Holding good trades longer:

 

First it requires a tremendous amount of focus!

 

As a stock is moving up or down how many shares print at the next price level? You will be shocked at how this one tip can change your focus.

 

If it is consistently printing at the bid in a down trend is there a buyer who constantly refreshes (not good) or does it moves relatively quickly through the shares bid?

 

If you are long, offer some shares out, if it is easy to get filled you want to stay in the trade, if it is hard to get filled get out.

 

How obvious is the 15 min 20sma and the 15 min price action? The more obvious the more you will want sit through the noise.

 

Are the market internals obvious or is the $trin flat lined?

 

How is the order flow in the market?

 

How far has the stock already moved compared to a “normal” move in that stock?

 

Based on that information how much more can you expect the stock to move?

What is the next level of support or resistance on the 5 day chart? If you are off that chart what is the next level on the daily?

 

How is the stocks sector performing today? (most stocks have an ETF you can follow)

 

Use our basic chart reading techniques: If there are no momentum reversal candlestick patterns on the 15 minute chart stick with the trade and look to add on a pause.

 

Is the 5 minute chart making consistently higher lows in an uptrend? This means the stock is very well bid and buyers are around. If it is choppy and inconsistent there is no obvious order flow.

 

One thing that is very important to remember is that you only need two or three of these trades to work out each day. Think of the movie industry. How many movies does a studio produce compared to how many actually make big money?

 

It only takes one blockbuster to pay for all those bombs. Trading is the same way; you must take all the trades never knowing which one is going to be a big winner.

 

You can however give yourself a better chance of a movie (trade) producing big gains by hiring a top star (obvious trend/order flow) to be in your movie.

http://keystonetradinggroup.com/concepts/index.htm#