When Quint asked me to put some thoughts together about how to day trade, I did not know where to begin.  I never intended to be a day trader, even today I am uncomfortable with that description of myself.  My style evolved out of necessity

I wanted to trade full time but could not stomach the thought of overnight risk.
I have always believed in concentrated positioning and could not afford to take an unexpected hit from a news or geopolitical event. 

The following is my attempt to lay it all of there.  What I do, why I do it, the risks, the rewards, and the daily strategy.

What I love about day trading:

1.  No overnight risk

2.  A fresh mind each day unencumbered by positional strategy 3.The ability to take size with limited total account risk.  If I can spot a trade with 1% downside risk, I can place 20% of my account into that trade, yet only risk .2% of my total assets.  I feel with positional trades it is unrealistic to expect stops this close on most trades.

4.  The ability to catch moves both ways in the same stocks

5.  The velocity of money.  In theory when I am trading well I am able to constantly move my funds to trades that working right then and there.  I am not stuck in positions waiting for the next move.

What I do not like about day trading:

1. Your trading costs are significantly higher than a positional trader.  It is not just the commissions, but also the bid/ask spread.

2.  I do not catch big winners.  This has bothered me so much that I
am considering dedicating a portion of my account to position trades. 
I often wonder if I am doing myself a disservice by not taking the overnight risk and managing through the occasional blow-up.

3.  Over trading.  It is a temptation and a risk that is challenging to manage.  You can get caught in the trendless days trying to catch a move and instead suffer 10 nicks.

Lessons I have learned:

1. Technicals do not change, only the timeframes do.  You can play all the same patterns - breakouts, cup and handles, head and shoulders, trending, bounces between support/resistance.

2.  Revenge trades are more tempting.  Because I often play the same stocks each day, a loss in one can be tempting to boomerang the trade
and try to make up the loss my riding the momentum the other way. 
Although this can work in the proper set-up, if it is being done out of revenge you can compound the losses.  For a while I created a rule
that I was only allowed to trade a stock once per day to avoid this. 
I no longer need that rule, but it is something to be aware of if you are just starting out.

3.  Remove all access to your daily P/L.  I make my best trading decisions when I have no idea if I am up or down for the day.  If I know that I am up, and I am up large, I tend to get wreckless, subconsciously I am playing with profits.  If I am up small, I get conservative.  If I am down, I can get wreckless or frustrated, trying to make the losses back.  Each day I purposely do not look at my P/L until the end of the day.  My goal is to make it so I only look at the end of the week but I am not there yet.  For me, it is not that my sizing changes, it is that I find my ability to make decisions of which trades to take is impacted.

4.  Remove all access to your cost basis.  Do not allow the anchor bias to creep in.  Trade the chart and only the chart.

5.  I will miss a ton of profitable trades.  I will moan about some of them, and groan about others, but always come back to reality.  I am making hundreds of decisions, and most often the answer is “no, don’t take it”.  The mind always remembers the ones I should have taken, but forgets the countless others where I made the right decision.

As you read the following please keep in mind that market days are like snowflakes - no two are exactly alike.  These times are my best estimates only and should be thought of as guidelines, not a set schedule.  My day hour by hour:

Evening/early morning - daily chart scans.  I go through about 800 of the most liquid issues looking for patterns.  Even though I am a day trader these are still my bread and butter patterns.  I am now learning to also check the 30min patterns on the set-ups I like to make sure they agree with the daily chart.  When I can find a set-up that looks good across multiple timeframes, my confidence in the set- up grows.

8:00am-9:00am. Creating watch lists, setting alerts.  Looking for
outsized pre-market moves.  I am not a news traders, but if I see something moving in the pre-market I want to know why.  I then look for attractive technical patterns in other stocks that might be indirectly impacted by the news and set alerts there as well.  From here I am developing my game plan for the morning session.  I can only cover so much territory in the first 30mins of trading so it is important for me to be focused.

9:00am-9:30am. I am now paying much closer attention to the pre-market action.  I am looking for movers, but also for disconnects.  For example, the market gapping higher but CSCO is off 1%.  Not a huge move, no news, but why is it acting punk?  Or market gapping lower, financials are lower, but GS is up 1%.  Although I have not done it yet, I want to start using this time to set limit orders for stocks that have already tripped an alert and are going to breakout on a gap.  I will rarely chase gaps, but I see no problem with creating a limit order within the gap to see if I can get an entry at a better price.  For anything that does gap, I will watch the ORB and see if it makes sense to take a trend day entry.  I also factor in overall technicals, size of gap, and market environment.

9:30am-9:40am.  Insanity.  Trying to figure it all out and get my initial read on the day.  I am primarily focused on my daily set-ups and looking for entries on breaks.  I might open as many as five positions, or none at all, based all on my comfort level with what I am seeing.  I am ingesting a tremendous amount of information while at the same time making fast “take it or skip it” decisions for each trade idea.

9:40am-10:00am.  For any number of reasons there will be trades I decide not to take, and I will begin resetting alerts on these.  There also might be new alerts going off, and these are the ones I get more excited about.  I still struggle with gap and go and other high momentum plays, and have a much stronger preference for a stock that opens soft and then makes a move a little later in the morning.  I am also looking for entries in stocks that made a big move off the open,
but have now retraced part of that move to offer me a better entry. 
Since my initial stop is usually at the low of the day, a better entry allows me to take more size in the trade.

10:00am -10:30am.  Now that the morning has settled in a bit I am trying to gauge the trend of the day.  Is the market volatile, are we trending, are certain sectors outperforming to upside or downside?  I am also gauging any trades I have made so far.  If I am getting nicked up, I tend to back off a bit and make sure I am not misreading the market.  If all my stocks are running as expected I may look to increase positions and/or look for other movers in same sector.  I am also paging through about 100 of my most favorite trading vehicles across all sectors trying to identify ORB’s. I might be entering on a 2-3% daily change, but my stop is nearby because it is a failure of the ORB.  I used to ignore stocks like this figuring they had already made their moves, and I’d miss out on 2-3% moves turning into 5-6% moves.

10:30am - 11:30am.  More of the same above, but also more trade management.  Evaluation of my performance, stop management, looking for what I missed.  If we are in a trendless day, this is where I may start shifting my strategy to one of scalping and working between support and resistance.

11:30am -12:30pm.  I rarely enter new positions at this time.  Instead I am removing anything that is not working, moving up stops on what is, and generally trying to protect profits and close out losses.  As we get closer and closer to 12:30 I will look to take profits in even the best of my positions.  I have lost more money at lunch hour
through greed and improper management than I care to admit.  At this
time I am beginning to think almost the same as when the day is ending.  For positions I do leave on, the stop usually stays below the 11:00am or 11:30 30 min bar.  I want to give the stops a little bit more room at lunch in anticipation of the fade.

12:30-1:30pm.  The dead zone.  I find most moves made at this time to be false moves.  You will often see fades of the daily trend and false breakouts.  I almost never enter a trade at this time.  I use this time to eat, rest, re-caffinate if necessary, and form an afternoon gameplan.  This is the halftime of my daily football game.

1:30-2:30pm.  Here I am trying to gauge the strength of the lunch time action and the follow through.  If it was a light volume fade of a trending day I will take the opportunity to re-initiate trades with the trend and look for new ones where I can put a convenient stop.  If we are going to see a trend reversal day, this is where I will often notice the follow through of the lunch time move, this time with more conviction.  I will also see stops get hit on open positions, another signal the morning move is over.

2:30pm -3:00pm.  On a strong trending day you will often see another fade in here trying to take shares.  I usually do not move my stops until this little fade is over.  On a reversal day or a trendliess day
this is not an issue.  Todd at Minyanville coined this “contra
hour”.  I cannot give a lot of other advice here as this time of day can be quite tricky, especially on Friday’s.  On Friday’s this is usually when you will see short covering in a bearish week, and profit taking in a bullish week.

3:00pm - 4:00pm.  The power hour.  I almost never trade this hour on Friday’s.  It is filled with suspect action.  The other four days it provides ample opportunity for strong stocks to finish stronger, weak stocks to get cleaned out and the occasional breakout on one of the set-ups off my daily scan list.  Sometimes I do very little this hour, other days I have waited the entire day for it because it finally shows me which way the market wants to go. On strong trending days it will usually act with trend.  On reversal days it will ride along with reversal.  On trendless days, this might be where you finally see the break.

4:00pm on - Review the trades, clear the head, and get ready to start all over again.

I have been through many of these patches as a trader and while each season of challenge has in the end, only made me stronger, they are never fun and always test me to the core. Unfortunately, while all of us will go through these challenges, rarely does anyone take the time to relay the experience directly, rather most pretend as if they never occurred at all. At present, I am going through one of these rough patches, so I thought it may be helpful to relay the process I have begun, in real time. 

Own the Mistakes – It is always easy to pass off mistakes on the environment and or situation. Before I can move back into the winning way, I have to fully accept what put me into the current situation. I was having a very solid year until the month of June. I had respected and played the tape for what it was, not what it could be and successfully avoided losses early in the year and went on to capitalize during the latest bounce. My confidence was high, as were my accounts however it was at this time I started believing I was smarter than the tape. When we started the May fade that ran into the June fall, I started to slowly wade back into the market looking for a turn. I was early, a common term in our business that really means wrong. Rather than stepping out quickly, I kept these positions on and waited, while the market continued to fall farther and farther. Despite it being a small amount of exposure I became stuck and rather than throw in the losing trade, have kept it on playing hope rather than the tape. I have accepted this mistake and while I will not dwell on it and let it keep me in an emotional dungeon, I will not pass if off on the environment or circumstance. I own it, it is mine.

Re-establish the Style – Every trader who has tasted success has a style that was at the center of this experience. More often than not, a trader going through a rough patch has slowly gotten away from his style and rather than morph into a new style, must right the ship quickly and re-establish the important tenets that the style possesses. Often it helps to write this out while at the same time reviewing previous trades to identify the style drift on each individual move. It is important however to not dwell on these mistakes, rather simply review them, make mental notes and move on. Traders looking to move forward, must keep their eyes on the future, not the past. I have done this, and feel confident in the style I adhere to and the future before me.

Understand the Process of Challenge – The irony of this whole process is that a trader will never stop going through similar situations. They may come at different stages in ones game, through different markets or different events, however come they will and I find it ironically comforting to know that no matter what I do, I will continue to face adversity through trading as long as I accept the challenges of this craft. It is why trading is so very rewarding, but never easy. At this very moment, I suspect that some of the greats such as Bill Miller are going through challenges of their own and working through the mistakes made. We often believe that these rough patches no longer apply to people of a certain caliber. This of course is not true, and we should all take refuge that at some point a rough patch will occur for us all. I am certain I will move through this challenging time, however I am just as certain that down the road, another one awaits me.

Reset and Refocus – The greatest thing about the markets are that each and every day new opportunity is presented. When a trader is going through a rough patch, and playing hope rather than the action at hand, it is important to undo the problems and start anew. This could be simply viewing the position as if you had just bought it and establishing firm rules of where you would sell or cover, however more often than not, a cleansing process must be pursued whereby the problem trades are eliminated altogether. Traders must understand that Mr. Market will always look to pour salt and often it is inevitable that the problem position will bounce shortly after being sold, however that is no reason to remain in the position while the financial and emotional capital slowly erode on a daily basis. At this very moment, as I see the market continue to drop and panic set in, I am reminded just how important it is to cut ones losses quickly. I still have a few positions that are broken or teetering on ill-health that need to be cut. I will pursue this in a methodical fashion and slowly remove the cancer with one incision at a time.

Set Actionable Goals of Correction – Like many individual athlete sports, trading is unique in that success is determined by the mechanics of the action and not necessarily the result. For example, a golfer may shoot the best round of golf in his career but lose the tournament. Was his performance a success? Of course it was. I often say that success in trading is in the style not in the outcome. This is of course predicated on the fact that if one is continuously successful executing their style, this will result in trading success over time. When traders set goals, they are often goals of performance which is acceptable as a brush stroke, however when a trader is faced with adversity, goals need to be simplified down to the qualitative execution rather than the quantitative outcome. For example, over the past several days, I have set a personal goal to possess a plan for each and every trade I make. If I do not follow this plan, whether profitable or not, I have failed however if I follow this plan I have succeeded. Again, the outcome at this point is not what matters, it is that I have firmly re-established the process and I am adhering to my style. The trick is to do so small with little risk, so that my confidence can rebuild slowly without doing further harm.

Persevere – Sometimes it is as simple as hanging in there and continuing to press on towards the goal. I am often encouraged when I see others who have succeeded through adversity and while the specific situation may not correlate with trading stocks, it is the simple fact that the person made a conscious decision to move forward, despite the obstacle. Regardless of what the markets do today, tomorrow or the next, if you as a trader continue to push forward, making sure you remain in the game, following your disciplined strategy, you will once again meet success. I have experienced it myself time and again, I have seen others do this as well and over time it quitting no longer becomes an option.

ARE YOU READY TO STOP MESSING AROUND AND START TRADING?

In February 2008, I held a Trading Bootcamp, which was attended by over 100 eager to learn, passionate traders. I completely underestimated the value that was found in simply teaching the techniques I have been using for several years, to others. This is just one of the comments I received. Many others can be seen below.


The Boot Camp has taught me more than I have learned in the last 30 years of investing.  I have a growing confidence in my ability to “trade” rather than buy and hold.  The lessons you have provided are far more valuable than perhaps you realize. I know an outstanding teacher when I see one!  Thanks for the hard work and dedication you put into Tickerville.  It is appreciated more than you know.

Download

Each Session is 2 hours in length and can be viewed from any computer. For less than the cost of 20 trades ($9.99 commission) you can absorb years of knowledge, disseminated in a clear and constructive manner. This is not a purchase, it is an investment.

$149.00

CD’s

Each Disc is 2 hours in length and can be viewed from any computer. For less than the cost of 20 trades ($9.99 commission) you can absorb years of knowledge, disseminated in a clear and constructive manner. This is not a purchase, it is an investment.

$199.00 plus shipping

What some Boot Campers are saying

"Quint, I wanted to reflect on the Boot Camp experience before providing feedback.  Now it is time.  I have been “investing” for almost 30 years (buy and hold).  I always thought there was a better way, but I didn’t know what it was.  I began following you on another site several years ago.  Your writing was clear, concise, and very educational.  When you left and began Tickerville, I had no hesitation in following you.  It is the best financial move I have ever made.

The Boot Camp has taught me more than I have learned in the last 30 years of investing.  I have a growing confidence in my ability to “trade” rather than buy and hold.  The lessons you have provided are far more valuable than perhaps you realize. I know an outstanding teacher when I see one!  Thanks for the hard work and dedication you put into Tickerville.  It is appreciated more than you know.

I am putting the lessons you have taught to work.

Thank you"

Steve

"Hi Quint, I just wanted to drop you a line and say that the first Boot Camp session was *fantastic*.  Very well presented, and in particular your handling of the psychology behind things gave me more than a few “a-ha” moments!  I can’t wait for the next session, and being from San Francisco where it’s a pretty early Saturday wake-up call that’s saying something! "

Greg

"Quint,
Thank you for such an excellent presentation.  You covered an amazing amount of material in a very well-organized way."

Becky

"Quint, Thank you so much.I made money in the market last week for the first time all year, using the things you taught us, AND it was fun. It felt playful—playing the market. I know I can continue winning.This couldn’t be more valuable for me, and it came at just the right time.I’d sign up for Boot Camp 2 in a heartbeat.I am sincerely grateful. Thank you."

Annie

"Hi Quint. Thank you for a great course. I thought it was excellent value compared to the amount of money I have spent on trading books! I appreciate the effort you put in to give us the benefit of your experience. "

Simon

"Dear Quint,
Thank you for the seminar.  For me, the timing of your seminar couldn’t have been better.  Today’s market is a treacherous place for the unprepared.  Beginning with the first trading day after the first session I looked with more understanding at chart patterns, earnings reports, analyst opinions, the news and the market in general.

The homework was valuable for me.  First I used it more to understand how your mind works and then to practice thinking that way myself.

Thanks again and best regards to you and your family. "

Georgette

"Hey Quint, Just finished the fourth session video and wanted to say thank you for what you have put together in this series.  You have done a fantastic job with this and I can’t begin to say how much this has helped.  Although I have been attempting to trade for some time it now feels as though I am just starting but with a new basis of understanding and I look forward to additional webinars as there is no doubt they will help all of us continue to develop.  In the meantime let’s get through this incredibly difficult period of the market so we can really get down to business.

Thanks again. "

Randy

"Hi Quint, Just finished watching the Session 4 video. It has been the best use of my $100 since I attended a Ron Paul luncheon fundraiser for $100 last year. What you said in today’s session, “Buy strength, sell weakness”, is so true. A lot of traders you see on TV seem to tell me the total opposite, but doing this opposite has cost me a lot of money in the last 2 months. Now (I hope) I know better, and hope I will start making decent money, this time with knowledge I’ve gained. I feel like I am more in control. I was surprised the other day when I had to sell JBLU as it was breaking down. I just thought “OK, this didn’t work, let’s move on”. Before the Camp, I never had this kind of unemotional response to a loss.

Thanks again! "

Kumiko

"Hi Quint, You have done a very rare thing in today’s world.  You have shared many years of refined wisdom with the luckiest students in the world.  Without Pop Ups, without fanfare, without big fees, just an excellent dose of life’s lessons that work.

Keep it up Q, "

Karl

"Quint, Thank you for taking the time to assemble such a valuable training session for the individual trader.  I look forward to more sessions in the future.  I have a great deal to learn in all areas of trading.  I started to keep a position sheet and diary.  I always ask myself would Quint agree before I take a trade. 
Thank you "

Arlene

Download

$149.00

CD’s

$199.00 plus shipping