Thoughts of A Day Trader

Einstein was criticized for not wearing socks or cutting his hair. He did not speak until he was four, and did not read until he was seven. One observer noted, He could be mentally retarded.


My thoughts on goals, style and strategy in 38 yrs of trading.

Before investing or trading, it is important to develop a strategy or game plan that is consistent with your goals and style. The ultimate goal is to make money (win), but there are many different methods to go about it.
As with many aspects of trading, many sports offer a good analogy. A football team with goals geared towards ball control and low-scoring games might adapt a conservative style that focuses on the run. Teams that want to score often and score quickly are more likely to pursue an aggressive style geared towards passing. Teams are usually aware of their goal and style before they develop a game plan. Investors and traders can also benefit by keeping in mind their goals and style when developing a strategy. While the following is not intended to be complete or exhaustive, it is intended to give you a starting point in formulating your own personal business plan for investing or trading. Here are some of the elements of a business plan that I suggest:
1. Will I trade full or part time? (I trade daily only the first 60 minutes)
2. How much risk money will I assign to the business? (I started out with $25,000)
(I define risk money, as money you can lose that will not affect your life or lifestyle. It does NOT include mortgage payment money, rent money, grocery money, car payments, insurance premiums, clothing money, or any other money you absolutely can not afford to lose).
3. What will be the size of my trades? (Equal dollar amounts, or equal percentage amounts).
4. How will I make my trading decisions? (I make my decisions daily based on Overbought, Oversold, RSI (relative strength) support Resistance lines.

5. When will I make my trading decisions? (For me daily 15 min. prior to opening)
In the evenings? Only on weekends? Once a month? It depends on what is going on in your own life.
6. How will I enter? (I use market orders)
7. How and when will I exit? (When trades reach my objective -1% loss or +1% to 2+%)
8. What strategies will I employ? (First 60 Minutes of TradingTM)

9. What are my business hours? (8:30-9:30 AM Central Standard Time daily)
(In my view, this is very important. If you had a store, you would be open certain hours. If we assign business hours to ourselves, they should be treated as exactly that–business hours. It is not a time to play with the dog or have non-essential interruptions. The business needs to be treated like a business).
10. What is the maximum number of trades I’ll have in place at any one time? (I personally only have two)

11. What type of stops or alerts will I use? (Mental Stops)

12. What are my specific trading expectations? (I try to risk no more that 1%, and manage it so that I will make at least a 1% gain on half of my capital.)

13. What will I do to increase my trading knowledge?
(Reading, seminars, paper trading, dvd’s, etc... Once you learn my trading strategy . . you will be considered a guru!)
Again, these questions are intended as a starting point only.

Abiding by the plan, once you have completed it, will put you in a rare class of trader and investor.
Goals
First and foremost are goals. The first set of questions regarding goals should center on risk and return. My goal is to make enough money in the First 60 Minutes of TradingTM to take off and do whatever I want for the rest of the day.
Style
After your goals have been established, it is time to develop or choose a style that is consistent with achieving those goals. The expected return and desired risk will affect your trading or investing style. If your goals center on quick profits, high returns and managed risk, then First 60 Minutes of TradingTM may be your style.
Styles range from aggressive day traders looking to scalp 1/4-1/2 point gains to investors looking to capitalize on long-term macro economic trends. In between, there are a whole host of possible combinations including swing traders, position traders, aggressive growth investors, value investors and contrarians. Swing traders might look for 1-5 day trades, position traders for 1-8 week trades, and value investors for 1-2 year trades.
Not only will your style depend on your goals, but also on your level of commitment. Day traders are likely to pursue an aggressive style with high activity levels. The goals would be focused on quick trades, small profits averaging 1-2% and very tight stop-loss levels. Intraday charts would be used to provide timely entry and exit points. A high level of commitment, focus and energy would be required.
On the other hand, position traders are likely to use daily end-of-day charts and pursue 1-8 week price movements. The goal would be focused on short to intermediate price movements and the level of commitment, while still substantial, would be less than a day trader. Make sure your level of commitment jibes with your trading style. The more trading involved, the higher the level of commitment.
Strategy
Once the goals have been set and preferred style adopted, it is time to develop a strategy. This strategy would be based on your return/risk preferences, trading/investing style and commitment level. Because there are many potential trading and investing strategies, I focus on managed risk, managed returns, no overnight positions, so I will not be caught in the stock market crashes like those of 1987, 2000 or 2008.
GOAL: First, the goal would be a 100-300% annual return. This is quite high and would involve only trading for the first 60 minutes of a trading day.
STYLE: Although I like to follow the market throughout the day, my goal is to make enough money in the First 60 Minutes of TradingTM to take off and do whatever I want for the rest of the day.
STRATEGY: The trading strategy is to go long stocks that are near support levels and short stocks near resistance levels. To maintain prudence, I would only seek long positions in stocks with weekly (long-term) bull trends and short positions in stocks with weekly (long-term) bear trends. In addition, I would look for stocks that are starting to show positive (or negative) divergences in key momentum indicators as well as signs of accumulation (or distribution). My indicator arsenal would consist of two momentum indicators (PPO and Slow Stochastic Oscillator) and one volume indicator (Accumulation/Distribution Line). Even though the PPO and the Slow Stochastic Oscillator are momentum oscillators, one is geared towards the direction of momentum (PPO) and the other towards identifying overbought and oversold levels (Slow Stochastic Oscillator). As triggers, I would use key candlestick patterns, price reversals and gaps .

As if you didn’t know, day traders are chartist not fundamentalist that is why they live by the following
STATISTICS MEASURE THINGS
FUNDAMENTALS CREATE PRESSURE
PRESSURES MOVE MEN
MEN MOVE MARKETS


I make enough money in the First 60 Minutes of TradingTM to take off and do whatever I want for the rest of the day. Is that what you would like to do? I am a retired professional stockbroker and am unveiling my 'Sneaky' and yet 100% legal shortcut to securing *Net* stock profits up to $1250.00 -- not in days or weeks -- but just 60 Minutes or less."

Picture yourself sitting in front of your computer on a trading day. It's now 15 minutes before the opening bell of the stock market. A few minutes after the market opens, you bought XYZ at $20. Twenty-seven Minutes later, you sell XYZ at $20.375. Since you bought 700 shares, you closed out your position with a $262.50 profit. That's it! Your 60 minutes or less trading day is over. You've made 1 roundtrip trade and made $262.50. Not bad for less than 60 minutes of sitting in front of your computer! You then say to yourself, "Okay, I've made enough money for today" -- and you take the rest of the day off. "I'll just do another 60 minutes of trading tomorrow. I could get used to this!" So you go and play tennis, go see a movie, go to the beach, spend time with your family, or do whatever you want to do. You wonder if you're always going to get the kind of returns that you got today. Then, you say to yourself...

"Well, I need not worry. I have a time-tested and proven system for pinpointing 'Bull Trap' stocks that have the highest probability of having price movements that yield profits. First 60 Minutes of TradingTM has a 70+% success rate at predicting the movement of stocks.”
Now you start doing the math, and say to yourself: "If I make about a 1% investment return everyday, how much would I earn in a month?"
NOTE: Get you calculator out, type in $25,000. as initial investment. 
To calculate how much you might earn in a month, multiply 22 as in number of trading days (since there are 22 trading days a month on average). $5,500.00 -- Not In Days Or Weeks --
But Just 60 minutes or less every day."

That is when I decided to parlay the tactical ability, the power to focus, and the schematic thinking that I learned from my years at Merrill Lynch into the skill of picking winning stocks. you see, day trading is part tactics, and part ability to focus and remain unemotional. In day trading stocks, the trader is always trying to challenge himself to try to predict the next move of a stock. Day trading is also based on war. You have to kill or be killed. A "killer move" is one wherein you have to kill on the first move. I used this "killer move" technique to devise the quickest way to make a killing with stocks that are getting ready to skyrocket or plummet. This resulted in the creation of my ‘shortcut’ methodology, which I’m about to tell you about in more detail.

I do not paper-trade, but I am a real-world day trader following my own system and rules of the patterns using my own investment funds. It was mostly touch-and-go in the beginning, and I often just broke even. But as time went on, my system began showing great promise. The more I tweaked and refined my chart analyzing, the more accurate it became. then, one day, I discovered that my chart analyzing had cracked the code to day trading success.

Have a wonderful trading day :0)

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