Getting Started

ONE TRADE AT A TIME
When starting out, do only one trade at a time.

PAPER TRADE
Paper trade until you are comfortable with the process.

LEARN TRADING SYSTEMS
Learn to use your broker’s system.

LEARN ONE STRATEGY AT A TIME
Don’t try to do too much. Learn one strategy at a time.

TRADE ONE TIME FRAME
Don’t trade different time frames until you are more experienced.

ACCOUNTS TO HAVE
Use one account for long term and another for short. In emergency, hedge one account with another. Keep one account with broker that has minimal commission. In the long term account, have one or two holdings for a week or longer. Hold stock as long as it is in trend on a daily chart.

2-3 TECH INDICATORS
Choose 2-3 tech indicators to start with (ex oscillator).

Entering Trade

DON’T RISK OVER 2%
Never risk over 2% of account on a trade ($200, if have $10,000 account).

WRITE DOWN MAX LOSS
Write down maximum loss you will allow on a trading day, once it is hit, stop trading and reassess processes.

BUY SMALL LOTS
When starting out, buy small lots (100-300 shares per trade).

ENTER PERFECT ENTRY ONLY
If there is no perfect entry point, don’t enter trade.

DON’T TRADE CONGESTION
Don’t trade congestion pattern (it is chaotic because traders can’t make up their minds).

WHEN IN DOUBT DON’T TRADE
Don’t trade when in doubt; wait until you feel confident about your decisions.

In The Trade

1 PT-TAKE PROFIT
When day trading, take profit when you have reasonable profit or point profit.

GET OUT WHEN IN DOUBT
When in doubt, get out of trade.

WHEN 2 OPEN TRADES LOSING
If you have 2 open trades losing money, stop trading and reassess what market is saying.

TIMING TRADES
Don’t exit good trades too early and stay in bad ones too long. Cut losses and let winners run.

IT’LL COME BACK!
If you are saying “it’ll come back”, or “please go up”, get out of trade.

TRADING DON’TS
Don’t chase stock (you will buy at top & sell at bottom). Don’t ignore stop, hold loser, overtrade, take oversized position, or buy against down trend.

Course of Day

VOLATILE DAYS
Don’t trade on volatile days.

DON’T BUY BEFORE OPEN
Never buy before opening bell. If you do, you will get filled at highest price. If gap fills, it can be a loss.

LUNCH TRADING
Don’t trade at lunch, it is too volatile.

AFTERNOON REVERSAL
If market is volatile, you might consider morning and afternoon as two different days. Don’t assume that because stock is strong in the morning, it will be strong in the afternoon because the market often reverses in the afternoon. Close out a winning trade or two before lunch.

DON’T TAKE HOME LOSING DAY TRADE
In intraday trading, never take home a losing intraday trade.

Earnings

EARNING
Don’t buy stock without good earnings announcement until you are sure what direction it takes (2-3 days). If stock shot up before announcement, when news is announced, many people will take profits  (increased supply will drive stock down). Also, when stock shot up before announcement, market makers had to sell their own shares (when there are more buyers than sellers, market makers have to short). The market makers will not allow the stock to keep going up forever. They will bring it down so they can cover their shorts. People panic and sell it to them at bargain prices, then the market makers raise bid and sell it to someone else.