<s> PDF made by Tarderman (Happy reading) Notes: There are some pages missing (Page 1, 84, 85, 120, 121). I will try to fix it, and reupload again, in meantime you could start reading 
 The Stock Trader
How I Make a LivingTrading Stocks
Tony Oz
GOLDMAN BROWNBUSINESS  MEDIA  INC.
To My Wife Jodi, and My Son Jordan,
You have made my life complete.
I love you both.
Copyright © 2000 by Tony Oz.  All rights reserved.  Exceptas permitted under the United States Copyright Act of 1976,no part of this publication may be reproduced or distributedin any form or by any means, or stored in a data base or re-trieval system, without the prior written permission of thepublisher.
Published by Goldman Brown Business Media  Inc.638 Lindero Cyn Rd.  #145 Oak Park, CA 91377.
ISBN  0-9679435-0-7
Printed in the United States of America.
Realtick""  is a  trademark of Townsend Analytics,  Ltd. © 1986-1999Townsend Analytics,  LLC.  Used with  permission. Any unauthorizedreproduction,  alteration or use of Realtick™ is strictly prohibited. Au-thorized use of RealTick™ by Tony Oz,  and Goldman  Brown  Busi-ness Media  Inc.,  does not constitute an endorsement by TownsendAnalytics of "The Stock Trader:  How I make a Living Trading Stocks"or any of Goldman  Brown  Business  Media  Inc.  products  or services.Townsend Analytics does not guarantee the accuracy of or warrantany representations made in "The Stock Trader: How I make a  LivingTrading Stocks" or the truth or accuracy of any information written,produced,  or distributed  by Goldman  Brown  Business  Media  Inc.
Disclaimer
This  book is  to be  used for informational purposes only and withoutwarranty of any kind.  The  materials  and  information  in  this  book arenot,  and should not be construed as an offer to buy or sell any of thesecurities named in these materials.  Trading of securities may not besuitable for all users of this information.  Both day trading stocks andinvesting in (he stock market in general have large potential rewards.However,  they both have large potential risks involved in which youcan lose all your money.  You,  the reader,  and not Tony Oz,  or Gold-man  Brown  Business  Media  Inc.,  are solely responsible  for anylosses,  financial or otherwise,  as  a  result of trading stocks.  Under allcircumstances,  you the  reader,  and  not Tony Oz,  or Goldman  BrownBusiness  Media  Inc.,  assume  the entire cost and all risks  involvedwith trading any stock based on strategies illustrated in this book.
Past performance is not indicative of future results.
TABLE  OF  CONTENTS
ForewordIntroductionChapter 1The ChallengeTrading Station  SetupChoosing a BrokerChapter?Setting the  RulesPreparing  for  Day OneBar ChartsCandlestick  ChartsSupport  and  ResistanceChanges  in  Supply and  DemandSearching  for Potential  TradesRunning Overnight ScansTips and GuidelinesChapter 3
Evaluation Risk/Reward RatioThe Final CandidatesChapter 4
Day  One  -  The  Early  WarningChapter 5
Day Two - FOMC MeetingChapter6
Day Three - Working on My Golf SwingChapter/
Day Four - The  Running  of the  BullsChapters
Day Five - Oakland Here I ComeChapterQ
Day Six  -  Learning  from  Beginner  TradersChapter 10
Day Seven - When the Guru Speaks, We Should All Listen
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1718
23
27
41
51
63
71
79
Chapter  11
Day Eight - The Market is Always RightChapter  12
Day Nine - Awakening the Bears
Chapter  13
Day  Ten  -  Silting  on  My  Hands
Chapter  14
Day Eleven- Free  Willy
Chapter 15
Day Twelve - Record Volatility
Chapter 16
Day Thirteen - Technical Problems
Chapter  17
Day Fourteen - Sitting Tight
Chapter 18
Day  Fifteen  - Thank  God  It's  Friday
Chapter 19
Day Sixteen - After-Hours TradingChapter 20
Day Seventeen - Nasdaq Looking for SupportChapter 21
Day Eighteen - Sweet Dream or a NightmareChapter 22
Day  Nineteen  -  Traffic  Jam
Chapter  23
Day Twenty -  Cash  is a Position
Chapter 24
Thank You, But No Champagne for me
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113
127
141
165
175
177
187
221
225
Chapter  25
The  Secret  to  Success
Chapter  26
Challenge Summary
Epilogue
What Happened Next
Bonus  Pack
Tips, Guidelines, Rules and Case Studies
Appendix  A
Plans, Records,  Stats and More
Appendix B
Creating a Constant Watch List
Appendix C
Creating Baskets
Appendix D
Real-Time and Overnight Scans
Appendix E
Basics  of Level  II  Quotes
Appendix  F
Direct Access Order Routing and My Setup
Appendix G
Advanced  Features  of MBTrader™
Appendix H
Resources  for the Active Trader
Glossary
Recommended  Reading
Seminars  and  Workshops
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229
233
235
243
247
249
251
253
255
259
265
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Acknowledgements
Many thanks to my wife Jodi and my son Jordan for making me smileeveryday.  I want to thank my dear friend Rick LaPoint who worked with meevery day from the initial setup for the challenge through writing the lastpage of this  book.  I couldn't have done it without you.  Special  thanks to mygraphic designers, jrp-graphics.com, Russell Paris, Julie Paris, and BruceCarries.  Photo on back cover taken by Annat Fink.
I want to thank Rachel, Betty, Orry, Abraham, Carissa, Daliah, and the restof the staff at Goldman Brown Business Media Inc.  for your patience andgreat work ethics.  I couldn't have chosen a better publisher.
Thanks to Tim Bourquin and Jim Sugarman for your friendship and support.This book would  have never happened  if it wasn't  for your challenge.
Many thanks to my dear friends Steve Mocbius, Kevin Britko, Alex andAndrea Maimon, Lcn  Cohen,  Scott Webster, Jerry Rabenberg,  Garbis,William Zhu, Richard V. Rueb, Chris Wheeler, Michael Turner, and NorikoCarries,  you  have  all  contributed  to my success.
Thanks to Townsend Analytics, Janice Kaylor, Danilo Torres, Mary Heim,Margaret Hafner,  The BBC, and  the crew at CNBC  for all your help.
Special thanks to Steve, Ross, Keith, Mark, Brian, Beth, Meg, Gail, Henry,Courtney,  David, Phil, Jeramie, Shawn, John  W, John G,  Mat, Brenton,Kenny, Forest, and the rest of the crew at MB Trading.  You have providedme with state-of-the-art customer support throughout the challenge.
I feel that I owe so many professionals in the industry a debt of gratitude.  Iwant to thank my colleagues and friends for their outstanding work inproviding education for traders: Robert Dccl, Ken Calhoun, Oliver Velez,John Bollinger, John Murphy, Stan Kim, Dan Gibby, Gary Anderson, MarkCook,  Alan  Farley,  Rogan  LaBier,  Brandon  Fredrcikson,  Toni  Hansen,Michael Williams, Eric Patterson, Ray Grant, David Nassar, Ted Tesser, thecrew at tradingmarkets.com,  and to all  the ones I forgot, please forgive me.
I want to thank two special ladies, Linda Raschke and Sunny Harris, whohave greatly contributed  to my personal  success and  to  the success ofnumerous traders across the globe.  You are an asset to the industry.
Thanks  to all the members of the Market Technicians Association.  Thanksto all the members of Daytraders USA, and special thanks to all my students.You have inspired me to write this book for you.
Foreword
I  sat  down  at  one  of four monitors,  still  only  half-awake  while  sipping  my  thirdcup of coffee since 3:30 am. The trading day starts early in California, and it tookalmost an  hour to get here.  But whenever a  great trader invites  me  to  watch  themtrade,  I  feel  compelled  to  take  full  advantage of such  a  golden  opportunity.  Littledid I know how extraordinary this experience would turn out to be.
For his second Book, a follow-up to his  instant classic, Stock Trading  Wizard,Tony Oz wanted to show the world how he trades stocks for a living.  And as  Iwatched for the next four weeks, all of his trading activities were documented in adetailed trading diary. The idea was simple, and the formula classic. He wouldinvite everyone to take an intimate look into his activities as he explains thestrategies and processes behind his actions.  It's a recipe that has worked for cen-turies, as Master entrusts to Apprentice a lifetime of knowledge and experience.
After having received an exciting challenge from the founders of the InternationalOnline Trading Expo, Tim Bourquin and Jim Sugarman, Tony planned to holdnothing  back,  providing  all  the  decisive  details  of each  trade,  including  thethoughts, strategies, surprises, and problems, and how he dealt with the moment-by-moment challenges the Market presented him.
Such a book had never been attempted before. No trader has ever put their reputa-tion on the line with this kind of honesty.  It's easy to search through past tradesand present the best ones. But no trader has come  forth in advance with the can-dor to say, "For the  next four weeks,  I  will  reveal  my every move,  for better orworse, entries and exits, winners and losers, with all my profits and losses."
Presented in these pages,  116 Round Trips are documented, including the charts,illustrations, and formulas. Tony explains the research and preparation; the joysand frustrations; the exhilarating victories and disappointing defeats. And ofcourse, the blow-by-blow descriptions of each battle between Emotions, Deci-sions, Market Makers, and Technology.
In this fascinating account, readers will quickly find themselves immersed in theaction  as  Tony weaves  his  narrative.  The  chess  game  never lets  up,  as  The  StockTrader matches his wits with the best the Market can throw at him.
And by an astonishing coincidence of timing, trading for this book was in fullswing during the Great Crash of April, 2000. When the devastation was complete
in
Introduction
Online trading is taking on the world with lightning speed.  It is one of thehottest, fastest growing businesses on the planet, and it has almost everyonewondering if they "have what it takes" to become a successful trader.  Stocktrading  is  even  becoming  a  common  topic  of conversation  in  places  whereyou  would  least expect  it to  be  brought up, sucli as  hair salons,  delis,  andeven grocery stores.
With the explosive growth of the Internet and the major changes occurring inthe financial markets, this industry is not just today's "hot thing," but also anindustry that is here to stay.  Indeed, I truly believe (hat online trading in allits forms is only in  its infancy.  This industry will continue to grow andchange to the point that what we know and practice today in the industrymay seem like ancient history in as little as five years.  How about oneglobal exchange in which traders across multiple continents will trade stocks,options  and  futures  for foreign  and domestic companies?  While  this  maysound  like a  far-fetched dream  to some,  and  one  that  I'm sure  floor  traders  inNew York City with  a  vested  interest  in  preserving  the status  quo will  doeverything in their power to prevent, it could soon become a reality. You justcan't stop or fight the technological revolution that's occurring, at least notfor long.
This revolution  has opened  the doors  to  Wall  Street and  is granting anyonewho wishes  to  participate in  this  business,  a pass.  This pass  is, by no means,a free pass,  as most speculators  will  soon  learn; however, if you wish  to  takeon the challenge and manage to survive the never-ending learning curve,you, too, can enjoy one of the most exciting jobs ever. And if you truly enjoyyour new "job,"  you  can  make  it  your business  and  have  the  time of your lifedoing so.  You  may have  noticed  that  I  used  the word job.  I  did  so  to makesure that you understand that trading stocks is work!  In fact, this job is moretime demanding than most people and the media can comprehend, or stocktraders  are willing to  admit.
Before I go on  further, I  feel  that I should give you some background aboutmyself.  I  will do so for the simple reason  that it's  important to know andtrust where this information is coming from. No one will use and benefitfrom ideas and experience they don't have confidence in.
Two  centuries  ago  (at  least  it seems  that  long),  I was  a young kid  whowatched  his  uncles play the stock market.  I  had a great passion for what  theywere doing and wanted to learn all I could about the market.  When I wasasked what I wanted to do when I grew up, I would answer, "I want to be a
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iv
stockbroker."  This brings a big smile to  my  face  today,  knowing now that Iwould never want to  be a stockbroker.  But at the  time,  I thought  it was themost prestigious job  in  the  world.  Why?  Because  I  thought that a stockbro-ker was  the closest person  to  the  stock market.  I had  no  idea back then  that astockbroker  was  really  a  salesmen  - or that  technology would  afford  me  theopportunity to bypass  brokers and trade on  my own.
Fast-forward  now to  rny  freshman  year in high school.  I had a passion fortwo  things:  sports and stocks.  Everyday,  on  my way to school,  I would stopat  Ihe  grocery store  and  pick  up  a  newspaper.  If you  asked  rny classmateswhat  I  was doing on  my breaks,  they would  have told you that I was  eitherplaying  soccer or reading  the  financial  section  of the  newspaper.  I  couldn'tget  enough  of what  was  going  on  in  the  business  world,  and  I  was  paper trad-ing, or better said, paper investing in certain companies based on fundamen-tal research.
The next year,  when  I was a sophomore, I woke up one morning not  feelingso well, and decided that skipping school  was a good  idea.  But I had alreadyexceeded  the  number of allowable  sick  days,  and a  note  from  my  parents  wasnot sufficient anymore.  1  needed a doctor's note.  So, I made my way to  theclinic  and got the doctor's note  I  needed.  On  my way back home,  I passedby a  lottery stand.  There was a  big prize  for the next drawing, so  the largesign drew my attention.  I walked towards the stand, and saw a soldier inuniform buying a lotto ticket.  It was a scratch-off ticket, where you find outinstantly if you win or lose.  I watched the soldier scratch the ticket and win$3.00.  The  vendor asked  the  soldier  if he  wanted  the  $3.00  or  if he  wantedthree  more tickets.  The soldier turned  to me and asked, "What do you  t h i nk Ishould do?"  Without hesitation,  I replied, "Take the money."  The soldiertook  my advice, collected  his  money and  left.  There was  an old man stand-ing  by the  booth where  this incident took place.  He looked at me and said,  ."Young  man,  why don't you  take  his  luck?"  I  replied, "I  don't  think  so.These  type  of lottery tickets  are  the  biggest  sucker game,  and  besides,  I  onlyhave enough  (o buy the other lottery ticket."  The old man  looked into  myeyes  and said,  "Why don't you  take  his  luck?"  I can't exactly explain  why Idid it, but before I knew it, I reached in my pocket and bought the lotteryticket the old man suggested.  I started scratching the ticket, and I won!  Iwon  the jackpot!  $15,000  to  be  exact.
I  was so  excited  (hat I practically broke the  world record  for the 400-metersprint.  I  ran  home so fast I even  lost the doctor's note in the process!  I calledmy parents immediately, and they did not believe me.  However, they quicklybecame  believers  when  I  surprised  them  with  a  $7,000  gift.  The  wonderfulthing about winning this money was that I now had money to speculate with.
I wish I could say that I had it easy from that point on,  but I didn't.  I didmanage to survive, and more importantly, I was learning valuable lessons.  Iwas  not  an  active  stock  trader.  I  was  an  investor and  did  well,  but  I  desper-ately wanted  to  trade stocks  for a  living.  The five years  following the  inci-dent  at  the  lotto  stand  were  the  typical  years  a  teenager  goes  through,  withmy priorities changing everyday.  Yet throughout this time, I continued in-vesting.  The  only  time  I  took out  any money  from  my account  was  to buymy first  car,  and  I  actually missed  the crash  of  1987  as  a  result.
Another  fortuitous  thing  that happened  on  my  road  to  becoming  a  careerstock  trader was  that I  met  my  future wife and  moved  in  with her.  She  livedjust  five  minutes  away  from  where  the  Investor's  Business  Daily,  The  DailyGraphs  and  other  William  O'Neil  publications  were  printed.  I  started  goingthere on a daily basis and learned technical analysis  from the pros.  Livingclose  was  also  a  big  advantage,  because  I  would  receive  tomorrow's  paperby  7:00  PM  today,  giving  me all  night  to  study  it!
From  that point on,  I have been committed to  learning all  there is  to  learnabout  stock  trading.  More  importantly,  I  truly  believed that  I  would  be  suc-cessful  at  it.  I  can't  tell  you  how  many new  lessons  I  learned, each  and  everyday.  I  had  the  basic knowledge needed  to  trade,  but  little actual  trading ex-perience.  I  could  read  the  tape  and  find  the  plays,  but  when  my  money  wason  the  line,  I  was a weak  hand,  and I  would "give"  my position away to  thesmart trader, without me capitalizing on  the big opportunities presented tome.
Despite  this,  I  kept good  records  of my  trades,  which  allowed me  to  analyzethem, so  I  could  discover why I  wasn't doing better.  Analysis of my recordsshowed  me  a  pattern  of mistakes  I  had been  making  over and  over  again.  Iknew  that if I  didn't correct  these  mistakes  and  learn  from  them,  my  future  asa  stock  trader would  not be  very promising.  I  see  now  that  keeping  detailedtrading records was the  single greatest educational  tool  at my disposal,  and Ispent considerable  time  pouring  over  them,  learning  new  lessons  each  time.
My goal  in  this  book  is  to  let  you  "sit beside"  me  and  watch  trade  after  trade.Some  are  "textbook"  in  how  well  they  come  together,  while  others  are  verymessy,  and  it  seems  everything  goes  wrong.  But  that  is  real  life trading,  andhopefully you  will  gain  new  insight  from my experiences.  This  is  my tradingdiary, and it is  my hope  that  from this  intimate  look  into  my everyday activi-ties,  you  too  can  learn  as  much  from  these  records  as  I  have.
., ,B| j;  i jj ;;  ;! '••>  W 
You  didn't need  to  look at her twice before you  realized that Linda  loveswhat  she docs  for a  living,  and  (hat she  is  very proud of it.  It  was  the prideand  love  for what she docs  that  made  her presentation  so dynamic  and  inspir-ing.  It was  high  powered,  like a drink  from a fire hose.
When (he fire department f i n a l ly put (he fire out and all the lights wereturned off,  I anxiously drove back home.  I couldn't wait to get online andsludy charts.  Something  very interesting  happened  when  I got home and didmy research  for the next morning.  I started writing an outline'for a "how doyou  do  it?"  book.  I  wanted  to  answer the question  I  was asked  in personevery other weekend  by members  of Daytradcrs of Orange  County, once  andfor all.  The  title  of the  book  was  StoclcJimkic:  Advanced Short  Term  Trad-ing Strategies.  Once the writing was  completed,  we printed 98 unedited spi-ral-bound  books.  The reviews  the book received  were  very positive,  and  thebook  was  edited  and  published  in  hard  cover under the  title, Stock TradingWizard,  by  my partners  in  August  1999.
While  my book  was  being printed,  my dear friend,  Tim  Bourquin,  took hisoriginal  traders  network  idea  to  the next level as  he extended his work effort,and  together with Jim  Sugannan,  they co-founded  the first ever InternationalOnline Trading  Expo,  which  took place  in Ontario  California,  September1999.  The  theme of the  Expo  was  education,  and  it  turned  out  to  be  a greatsuccess.  What  I  enjoyed  the  most  from  speaking  (he  Expo  was  the  opportu-nity to sec,  talk  too,  and  teach  traders  who  flew in  from all  over the world.  Itgave me  (he  feeling that day trading is here to stay,  and I was proud to beone  of many  who  shared  a  passion  for  the  market.
Following  the  success  of the  Expo,  Tim  and  Jim  scheduled another show  totake place  in  New  York,  Fcb  18-20,  2000.  I  was  invited  to be  a guestspeaker and (each a t u t o r i al about high probability trading.  To make this tu-torial special, I would walk the attendees through case studies of actual exe-cuted trades,  from concept to completion.
Two  weeks  before  the  Expo  in  New  York,  I  met  with  Tim  and  Jim  for lunchat a  local  Sushi  bar.  We  were  talking  about  the success  of my  book,  StockTrading  [Vizard,  and  about  my upcoming  presentation.  Tim  and  Jim  also  in-formed me that my tutorial  was number one in pre-registration.  We  figuredout  that  there  was  a  lot  of interest  from  traders  to  sec  a  recap of actual placedand executed  trades, studied  in detail.  As  I was stuffing my face with a spicytuna roll,  I noticed  that Tim was cooking something  up in his head.  He hadthat  serious  look  on  his  face.  Then  came  a  smile  as  he presented  his  idea.
"I  have  a  challenge  for you,"  Tim  said.  "I  want  you  to  take  your book,
Stock  Trading  Wizard,  and  show  the  world  how  you  actually  implement  thestrategies you featured in the book, in real life.
This idea started an entire conversation where the three of us were brainstorming.  The result was  that I  was  going  to do something  that had  neverbeen done  before and  would  hopefully benefit many traders  for years  tocotne.
Here  is what  I  would  have  to do:
I would start  from scratch as if I was a beginner.  I  would  research and  selectthe right broker.  I would open an account with $50,000 and  follow all  themoney management and risk management rules outlined in the book.  Iwould  trade  for a  period  of four weeks,  starting  on  a  date  selected  in  ad-vance.  I  would  feature all  trades — winners and  losers — from concept tocompletion.  The  goal  was  for a  reader  to  spend  four weeks  with  me  andlearn how I trade stocks  for a  living.
I really liked  the idea and challenge Tim  and Jim had  for me.  I  felt it wouldbe  beneficial  for anyone  who considers  trading stocks  for a  living  to see  howI do  it.  I accepted  the challenge,  and we decided that  I  would have  the  ac-count  ready and  start the  trading  no  later than  the end  of March.
Trading  Station  Setup
Before I could get started, I  needed another  PC.  I wanted  to  have a  backupunit ready to ensure there would be no interruptions in case I ran into prob-lems.  I bought a new custom Pentium  III with dual, 8  Megabyte graphiccards  powering  dual,  21"  monitors;  256  megabytes  of RAM;  and  mimingWindows  98.  My other computer was  already running  NT 4,  with a DSLInternet connection,  and  my new  PC  was  connected  to  the  Internet via cablemodem.  I  had  to swap  various graphic  cards,  cables,  hubs  and settings  to geteverything just right, because  I  naturally wanted  my new PC to be my pri-mary workstation.
Beyond  giving  me  an  added  degree  of psychological  comfort,  all  thesebackup precautions  turned  out  to  be very prudent,  because at one  time or an-other,  the  DSL  went  down,  the  cable  feed  went  down,  and  a  PC  froze  up.  Noteveryone  may need  such  an  elaborate  setup  for their own  trading,  but  I  can-not stress  enough  the  importance  of having  backup  systems  in place  for  thoseoccasions when disaster strikes.  In  a  world so  heavily dependent on  technol-ogy,  the  unexpected  seems  to happen  routinely.  As it was,  I  ended up  losingmoney or  leaving  some  on  the table  due  to  technical  problems.  But  I  could
have gotten into bigger trouble had I not been able to quickly switch to a dif-ferent computer or data  feed.
By the time everything was ready,  I  had  two computers,  four monitors,  aprinter, and a TV.  Besides having CNBC running in the background, thetelevision would indicate if the cable company was having problems, ratherthan the data feed or my PC. All in all, the furniture, lighting, deliveries, andvarious installations and setups set me a week behind schedule, which justshows how the best planning can still run into unanticipated" problems andsetbacks.
Choosing a Broker
This  is probably the most important element of the setup procedure.  I knewfrom past experience how important it is (o have my account with someone Ican  trust.  Before I discuss the guidelines  I followed to select the right bro-ker,  I feel  I should explain how some online brokers make money.  Have youever seen  the  phrase  "free  commissions"  or  "$0.00  commission  on  marketorders" used in promotional advertising?  You probably have.  In fact therearc  companies out there  that offer "Free Trading."  How is  that possible?How can  they afford  to pay  for advertisement on  TV if they work  for free?The answer can be found if you read in  between  the lines.
The  first  thing  you  will  notice  is  that  free  commissions  are  offered  for  ac-counts with limited customer service activities.  For example, all communi-cations with the customer are via the Internet, exclusively (E-mail).  They donot offer a telephone number or a physical  location for customer service.  Alltrades and customer service are only handled through the Internet.  Do youknow what happens if you bought a stock at S45.00 and it is falling downhard and you  lose connection to the Internet?  You arc toast my friend!There  is no one to call  to get you out of the trade!  You can lose thousands,in this case.
Here  is  the next catch.  You will often read that the Market Makers and Spe-cialists  who execute  trades  may pay the  brokerage  firm  for order flow.  Whatis  order  flow?  Simply put,  the  brokerage  firm  SELLS  your order.  Thesepayments  used  to  average  as  much  as  $9.00 per  order.  Why  would  a  MarketMaker or a  Specialist pay  $9.00  on  average  for your order?  I  am  sure  youguessed  it by now;  he would do  so,  because he plans  to make a profit from  itat  your expense.  How  do  you  like 