Home > Psychology > paying attention when day trading for a living

paying attention when day trading for a living

I have traded or managed for proprietary trading firms for over 12 years now. As a day trader I want to earn my living from the stock market from what is happening today, right now. I have never had a long term view of the stock market, long term to me is 5-10 days. I wrote a post 2 weeks ago about how the price action we are experiencing right now is ominously similar to March of 2003.

Way back then there was a brutal downtrend in pretty much everything and the news was bearish also. Mot of the day trading community can spot market reversals before the investment world. Why is that? It is very simple, as short term stock traders we will be the first to know if new lows are tested and penetrated with convincing volume and follow through or if we have a weak “failed test” of the lows where short selling provides headaches instead of profits.

If you are watching CNBC and all the talking heads right now there is plenty of talk about how bad bad bad things are. If there is one thing I can confidently tell you is that the market is a forecasting tool, a discounting mechanism. It does not look to the past, it looks to the future and right now in the short term it is telling us the selling pressure is NOT as heavy as it was the previous quarter.

If you are an active day trader, pay attention to what price action is telling you on an intra day basis, not what the news is telling you should happen next. Right now we are making higher lows across the board. Does that mean we are done going down? Maybe, but I can tell you the “easier” money intra da has been to the long side, as a buyer. That is where the follow through has been.

We will get a few days of selling soon, some of the stocks we are watching advanced 40% this week! Pay attention to see if the market makes higher lows and continue to trade long until we get a few heavy volume distribution type days.

  1. Michael Lurski
    November 14, 2008 at 4:19 pm

    It’s been my 3rd week with the KS play book and I must say that I’m loving it! You’re approach is simple, just the way I like it … not to say it’s easy of course.

    Obviously, most come to the market with a preconceived “idea” and though I have been some what successful as a “hobby” trader, it’s been taking a very conscience effort to focus on … as you say on “printing green”. As you mentioned many time in your 101 class, the play book works though.

    For me the plan is providing me exactly what has been missing from my tool kit … converting good ideas into green. The play book has brought structure to the short term price action … it’s made entry and exit so much less random. I still have a 2-3 week view when I sit down in the morning,, but the play book has kept me from simply having a position in the middle of a range simply because I have a 3 week view.

    I’m enjoying my entry into the KS realm and also finding value using the chat utility throughout the day.

    Another good article written by you, Pete.



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