DAY TRADING 101


This is where you’ll learn how to school the stock market. The Member Page contains even more education, daily charting videos and current market commentary as well as the Watch Box and Hit List. So visit our Sign Up page and become a member today.

TEN BASIC STOCK MARKET TRADING RULES


  1.   Be a disciplined trader. We don’t trade on impulse. We don’t trade on recommendations from friends or family and definitely not from media hyped news. We wait for trades to come to us. If we miss an entry, we don’t jump on board after the stock is well into it’s move. There are entries setting up every day. That is what we remain patient for. That is what makes us money. And that is why we must be disciplined. 

  2.   Trade stocks that move. Stocks that have volatility. We don’t have to trade the wildest stocks in the market, but we don’t want to tie up our money in stocks that take two weeks to move fifty cents. Obviously, with volatility comes added risk but by becoming a disciplined trader we have no reason to fear that risk. Stocks that move make us money and that is why those are the stocks we must trade.

  3.   Be aware of market conditions. Know the general trend of the market and trade in that direction. When the market is trending up, we look for stocks that have pulled back and are ready to go up. When the market is trending down, we look for stocks that have risen and are ready to pull back. When the market trades in a range, that is what is called a “trader’s market” and we have a field-day trading ups and downs. It is always easier to make money when we trade in the direction of the general market and that is why we must be aware of market conditions.

  4.   Trade in even dollar increments. You get to set what that increment is but you have to stick with that level until you are ready to advance it across the board for all of your trades. For example: buy 200 shares of a $50 stock, 400 shares of a $25 stock and 115 shares of an $85 stock. In each of these trades you will have roughly $10,000 at work and $30,000 total in the market. Your set increment doesn’t have to be a precise dollar amount but always err on the under rather than the over. This is simply a good way to keep your account in balance and easily recover should one of your trades make a steep unexpected drop. If you had loaded-up that entire amount on a single trade and it didn’t go your way, then it would be extremely difficult to recover the loss and that is why we trade in even dollar increments.

  5.   Don’t be greedy. You are not going to get rich on any single trade so don’t try to squeeze every single penny out of it. Take a profit. Take a profit when you are happy with the gain. Take a profit when technical indicators tell you to take a profit. Take a profit and be happy with it regardless of what the stock does afterwards. I recommend new traders to take a profit whenever their stock is up a dollar from their entry. If they have 100 shares, that’s $100. There is nothing wrong with leaving money on the table. In fact, I would much rather do that than have a respectable profit and then watch the market take all or even some of it back. We are methodically building wealth over time, not getting rich overnight. Even small profits can add up big over time, and because of that simple fact, there is no reason to be greedy.

  6.   Don’t be fearful. The stock market is fueled by the emotions of fear and greed and fear manifests itself at every turn. Fear to enter a trade. Fear to exit a losing trade and take a loss. Even fear to exit a winning trade - which as mentioned above can also equal greed. The market does everything it can to constantly induce fear into its participants. Just reading articles about a stock before you even think about entering a trade will make your head spin. One article says something positive, another says something negative and then fear and uncertainty begins to cloud your vision. The market itself throws head-fakes to flush weak hands out of strong positions and then turns right back around and goes in the direction the trader was anticipating. “Smart money” knows set-ups the “crowd” is expecting and then takes them in the opposite direction. The only way to combat fear is through confidence and the only way to gain confidence is through education and experience. Luckily, that is what I provide here. When we enter a trade, we are confident because we do have the education and experience to trust in the set-up. We will not be shaken out. We will not be greedy. And therefore, we have nothing to fear.

  7.   Keep records of your trades. This helps you learn which strategies work and which do not. It allows you to fine-tune your trading techniques and it helps you to understand how various stocks move. In your trading, you will notice the same set ups happening again and again in stocks you have traded in the past. If you keep good records you’ll know whether to play or pass on that set up when it comes around again.  Keeping records also helps you understand yourself. When you see your trades and their outcomes in plain ink, there is no hiding from them. You may start to realize you’re trading too much, too risky or too conservatively. You’ll begin to understand the strategies you trade the best and then focus more on those. In your records you should have: Date in - Buy price - Date out - Sell price - Profit or loss total -  Your reason for entering the trade - Your reason for exiting the trade. This plays a big role in becoming a disciplined trader and that is why we keep records. 

  8.   Learn charting. Before you even attempt to place a trade in the stock market you have to have a basic knowledge of charting. Learn about the major technical indicators: trendlines, support/resistance, MACD, RSI, stochastics, EMA/SMA, Bollinger bands... there are many others but those are the indicators I primarily use. Learn about volume and its relationship to price. Learn about candlesticks and their important formations. And finally, learn about charting patterns: Head & Shoulders, channels, wedges, triangles, pennants, flags, double tops/bottoms, cups and handles... Again, there are many patterns but those are the major ones to start with. You will learn a lot from the the videos I post in the Member Page, but outside reading is always recommended to learn stock market charting.  

  9.   Trade quality stocks. Quality stocks have the key trait we are looking for in that they are predictable. That doesn’t mean they do what we want all of the time, but quality stocks typically behave in predictable ways. They adhere to technical trading principles. Without looking at the fundamentals, in general and obviously there are exceptions, I consider a quality stock to have an average volume over 300,000 and an average price over $20. Stocks with low volume can be easily manipulated as can stocks with a cheap price tag. Not to mention, stocks with a cheap price tag are cheap for a reason. If you want to go broke quickly, then trade penny stocks. Institutions are not even allowed to touch stocks under $5 and neither should you. The beauty of technical trading is that you don’t have to dive into the fundamentals of a stock because you will not be holding it long enough for the fundamentals to significantly change. That brings up the quick point that you should not hold a trade into earnings no matter how tempting. It is just too unpredictable. You should, however, always do research on a stock before you enter the trade. You need to do this in order to find out the earning’s release and make sure there isn’t any recent bad news. Aside from that, you’re just going to find a bunch of irrelevant conflicting opinions. That doesn’t matter with quality stocks and that’s why we trade them.

  10.   Have fun. Above and beyond anything else, enjoy being a trader. It’s much easier for people to become successful doing something they enjoy doing. If you’re not having a good time, then you’re probably losing money and you should step away. Learn some more. Paper trade. Then come back and enjoy the party we’re having here.

Here you’ll find stock charting videos explaining and demonstrating how various technical indicators and charting terminology play into the analysis of a stock. These videos are great to watch as a review for those who have already been trading in the market and perfect for new traders to watch and learn some of the basics. Includes videos on subjects:

Finding a stock charting service | Candlestick charting | Horizontal support and resistance lines | Trendlines | Trading Channels |   Fibonacci Lines | Head and shoulders pattern | Double Tops and bottoms Pattern | Triple Tops and bottoms | Falling Wedges | Rising Wedges | Bull Flags | Bear Flags | Triangle Patterns | Trading Gaps | Candlestick Charting Formations | Bollinger Bands | Stochastics | EMAs | SMAs | RSI | MACD | Multiple Time Frame Analysis ... and much much more!

CHARTING TOOLS


FINDING A CHARTING SERVICE


CANDLESTICK CHARTING


HORIZONTAL SUPPORT & RESISTANCE LINES


TRENDLINES


TRADING CHANNELS


FIBONACCI LINES / PERCENTAGE RETRACEMENTS


CHARTING REVERSAL PATTERNS


HEAD AND SHOULDERS REVERSAL PATTERN


INVERSE HEAD AND SHOULDERS PATTERN


DOUBLE TOP PATTERN


DOUBLE BOTTOM PATTERN 


TRIPLE TOP CHARTING PATTERN


FALLING WEDGE PATTERN


RISING WEDGE PATTERN


CHARTING CONTINUATION PATTERNS


BULL FLAG PATTERN


BEAR FLAG PATTERN


ASCENDING TRIANGLE


DESCENDING TRIANGLE


CHARTING CANDLESTICK FORMATIONS


DOJI AND SPINNING TOP CANDLESTICK


BULLISH ENGULFING CANDLESTICKS / OUTSIDE DAY PATTERN


BEARISH ENGULFING CANDLESTICKS / OUTSIDE DAY PATTERN


HARAMI / INSIDE DAY FORMATION


HAMMER CANDLESTICK FORMATION


HANGING MAN CANDLESTICK FORMATION


PIERCING CANDLESTICK FORMATION


GAPS


BREAKAWAY GAP


RUNAWAY GAP


EXHAUSTION GAP


CHARTING TECHNICAL INDICATORS


EMA EXPONENTIAL MOVING AVERAGES


STOCHASTIC OSCILLATOR


MACD MOVING AVERAGE CONVERGENCE DIVERGENCE


BOLLINGER BANDS


RSI RELATIVE STRENGTH INDEX


BEFORE THE TRADE


MULTI TIME FRAME ANALYSIS


PROFIT / LOSS TARGETS


MONEY MANAGEMENT








HOME      MEMBER PAGE      SIGN UP      DAY TRADING 101      ABOUT ME      TRADE SMART      VIDEO TUTORIALS

This site is FREE for now while we build our content.
Everyone will have complete access to the Member Page.