ve discussed: MSCO MLCO GSCOSBSH.
Befow is a rouah animation of fhe oatiam fo watch for MLCO was on theask (ooking like a buved), then he flips aver fhe ask (now he’s a seller); fFyou're in fong fhen you might want fo consider selling as weil, ifthe TESconfirms net seffing.
 
 feTa __e|feeavene 3] Pl
Notice how MLCO flips over to theask in this rough animation weconstructed, If a major mm like [aun [sid |e. awl ask [allMLCO and both major ECNs [el Lat(ISLD/INCA) are selling, | wouldn'tbe holding long here.
 
The GOAL for this activity is to help you learn to spot reversals (or pivots) in pricedirection based on what you see a major market maker doing when he flips from being abuyer to a seller (or vice versa} on the inside bid/ask of a level 2 window.
Directions:
1. Choose several stocks to watch from 9:30 am til 11:00 am in level 2 windows.
2. Identify the "most important market maker" for these stocks based on who's buying andselling on the inside (yellow) bands initially (with first preference given to MLCO MSCOSBSH GSCO}
3. See if you can detect any reversals in market makers’ bias towards buying or selling, based‘on their "flipping" back and forth frorn the inside bid and ask
4. Aswe saw earlier, you can also look far trends in where they are playing their trade box, egif they drop their bids or raise their asks etc. This activity is to help you see abrubt pivots, ordirectional changes, in their buying or selling activity
5. One more of the market makers' behaviors exposed for our DTU traders!
6. After seeing a reversal, follow the T&S ta see if it holds, and to see if the market makerhimself stays true to his reversed position for any length of time. Sometimes, they areindecisive and may flip back and forth, but they will usually hold through at least a spread ortwo of direciton before changing fram being a buyer to 4 seller or vice versa.
7. Once you've identified a pivot that holds true, see if you could papertrace it accurately,would you join the market maker in his now-changed position in the stock, and if so, will ithold long enough for you to make at least a few spreads’ profit by it?Module
Tt The Mental Game of Daytrading,Click on each link for a new daytrading lesson. Be sure to Back tecomplete the trading worksheets and activities for each module. DTU CAMPUS MAP
Click on each line for daytrading lessons fromthe list below. Keep checking back every coupleof days for new lessons, activities andworksheets. An underlined link means thecontent is now available. Note: set yourbrowser to refresh "Each Session" youreload a page...Enjoyl
® = Updated pages win last 4% hours.
 
DTU Module Three Lessons:
« Mental preparation and focus: Tips for How to get into your "trade zone"
« Developing the Skill, Patience, Discipline and Attitude to Succeed atDaytrading
+ What you should be doing first thing in the morning before the marketopens
« Creating a Successful Trading Environment: What to Put Near YourMonitors
« Dealing with Trading Losses: Or, How to Lose wifhouf saying "#@$% |just lost another $300"
« Maintaining a profitable risk:reward ratio in your trading
« Disciplined Trading: 10 Practical Tips to Stay Ahead of Trading Losses
« Setting Daily Profit and Loss Targets: How to Know When to Hold, Whento Fold
« Becoming a Better Trader: Having Patience with Yourself
« Knowing the Rules of The Game and Following Them - DaytradingDiscipline Tips
« Minimizing Losses and How to "Turn the Corner": Trader's“Turnaround Wheei"
« Celebrating Victory: Trading Rewards and the Daytrading Lifestyle
Click here for Powerpoint viewer program<=> ee Click here for MSWord view progam
(.5Megs)
e What to Do When YouLose
« Finding Your DaytradingDiscipline
e Developing a Daily TradingMatrix
e Increasing & DecreasingTrade Sizes
 « Thinking Like a ProfessionalTrader
« Becoming Focused on theTrade
« Using Your "Lessons Learned"in Trading
« When All Else Fails...
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COPYRIGHT (c) 2000-20014 Hawaii Business Training Group. Allrights reserved Duplication prehibited.
 
 
Successful Online Daytrading Training ResourcesLearning Your
a etl “Trade Zone”Discipline
& @
How long it takes you to get from the "land of confusion" through the learning curve and into your personal“trade zone" vanes by individual, aptitude, effort and slall. Many peaple will never succeed at daytrading,looking at it like gambling and not willing to put in the hard work, determination, patience and practice it takesto be consistertly successful.
 
A fair number will do okay, and a handful of dedicated people will be able to make a living atit The ones whocan daytrade for a living will be those who look at it like a career change, recognizing the need for training,patience with themselves, and a curiosity to leam new techniques. Itis not easy to daytrade for a living. It canbe done, but you have to be willing to work very hard at it. Reading the popular books is maybe 15% of whatyou need to do to succeed.
Most of itis market-watching, learning financials, doing daily research (IBD, Clearstation, Bigcharts,CBSMarketwatch), leaming the technical aspect of intraday trading the financial markets, learning how toshort stocks, and other skills we continue to cover here at DTU. | want you folks to make it, just realize thelearning curve is much much harder than the books make it out to be
34 Eliminating Your Barriers to Successful DaytradingIdentifying and Getting Rid of Common Barriers Is an Ongoing Key to Trading Success:
Barrier #1: Lack of Disciplined Trading Attitude and Mindset of a Trader. To win at this game, youneed to follow the rules (such as keeping tight stops) and see yourself as a trader. When | first got started, |put clippings from guys like Serge Milman around the office. A photo of the ferengi trader from star trek.Anything it took to get myself thinking like a trader: to buy at one price and sell at another price for profits 1swhat | must lear to do for a living. My success is measured by my P&L at the end of each day.
Barrier #2: Not investing the time and resources to do the job right. Get at least 2 monitors, a goodbroker and quotefeed etc. etc. It's much cheaper in the long run. Having 4 monitors is great.
Barrier #3: Not being serious enough about daytrading as a profession. Some losing traders aremore like gamblers, playing $5 low-volume stocks and trying to make a fast buck. They lose. You must takethis game very seriously if you are to take money off wall street. You're in competition with professionals,you must think like and trade against other professionals to make a living at this.
Barrier #4: Having no trading plan or entryiexit strategy for your trades. Make sure you havepredetermined entriesfexits etc common sense but when was the last time You updated your tracingjournal? See the ones | developed for you in Module 1 as a starting point, develop your own.
Barrier #5: Physical daytrading environment not conducive for success: We'll look at this in detailIn another lesson, for now, make sure to have a quiet, welHlit uncluttered trading area to work from. Use anergonomic keyboard, change your cursor/mouse pointer icons, expenment Keep CNBC {and thewife/girlfriend) muted when you're in a trade, or setting up for a trade.
Barrier #6: Hesitancy to get in a good trade & staying in bad trades too long: My average trade timedecreased from 30 rinutes-2 weeks when | started to around 10-15 minutes now. | miss on big runs up, butllike to scalp for 3/8s to 1 1/2 points profit many times a day now If a trade is saying "buy me" then followthat signal. It's much better to miss a good trade then to force low-percentage trades, thoughMarketwatching is what | do 98% of the time, 2% of the time I'm fading Be a sniper looking for targets ofOpportunity
Barrier #7: Not managing your physical readiness for daytrading. No | don't Just mean drink a pot ofcoffee, even though | quess that's ok too. Daytrading is highly dermanding physically and mentally. Takebreaks frequently during the day (especially during the lunch deaczone, look for stock picks then), refocus,your eyes on something far away to relieve eyestrain, splash water on your face now and then, stretch, drinklots of waterftake vitamins, have some carbohydrates prior to the day's trading (I always eat a microwavedbaked potato or have some rice and eggs etc.}, keep yourself fit by walking around the block or somethinga couple of times a week, whatever works for you Daytrading |s like being an air traffic controller, alwaysmonitoring gauges and locking for signals, then responding. Refresh yourself. And, take a day off now andthen. Sit out flatichoppy days. The market will be there tomorrow. Keep fit.
a Getting into Your "Trade Zone"
Successful daytraders have several things In common. Let's look at the actions you can take to get Into aprofitable “trade zone ":
1. Learn how to filter information quickly: you need to develop an experienced eye for what is worth payingattention to (eg shorting the gaps up on open, playing the days gainers/losers correctly, news plays, chart & level2 signals etc.}. There is way too much financial information available; learming to quickly identify what is Rkpotentially profitable from a daytrading standpoint is an important skill to develop:
2. Keep tiny small stops. although | say it way too much it's the number one daytracing skill to master. taking afew small scratches so you can profit from large runs Is critical. It builds confidence; eg I may take 3 1/16th pointstops while trying to find a bottom before it rebounds 1/2 to 1 1/2 points; that's great. | walk away @ winner. Stopsshould be no more than 2-3 spreads max (| usually use 2 spreads w/a micro look at the 1st outside bid/ask)
3. Post your winning trades around your trade area. when | got started, I'd always print out an intraday chart ofmy winning trades and use a green felt market to circle where | bought, where | solc and how much | madecircled, such as +262 for the # dollars | made. It's important to keep visual reminders of your successes.Document your bad trades in your trading journal and look for cormmon threads {like the types of stocks youplayed, the time of day and number of shares you traded etc.). Standardize what is winning for you.
4. Develop daytrading goals and a trading plan you believe in: having goals that you believe in is a powerfulmotivator (read Tory Robbins’ stuff}; now when | asked you for your daily average profit target | mean how muchdo you Wart Lo earn on an average day, not a mandatory daily target. Some days you shouldn't trade at all. Cinother monster days you should trade very aagressively, as your net risk is lower. It's important to identify yourgoals though, starting with a profit target, so you can budget for living expenses etc. Also develop daytradingprocess goals, such as "I will try to make between 1 and 2 trades per day for each day of the next trading weekif |see a high-probability daytrace in front of me", or "I will keep @ 2-spread stop maximum on my next 10 trades"or "Iwill update my trading journal each Saturday morning" or "I will not make a trade unless both the $TRINQ and$COMPQ confirm that market direction is headed my way for the next 5 trades.
5. Share your daytrading progress with family and friends: tell people about what you've learned, or at leastthat you're learning new things each day. Share your trading progress, for example you could say "I've lost some,but I'm getting better, | averaged $160 profit on each of my last 3 tradest" etc. Find supportive friendsffamily toshare your trading activity with. Avoid toxic people
é Know when to hold and when to fold and when not to trade In the first place: some days aren't good foryou to trade on, even if the market's great. Maybe you're not in a good mood. Or you have a hangover. Or youhad a fight with your wifeffriend/boss etc. Don't trade on those days; just watch, leam, or take a break. Regroup,perhaps take a few days off. For learning, | find going to the beach, park or library is a nice change of scenery,you may be re-reading a daytracing book but somehow reading it in a different place causes you to pay attentionbetter. Try it
7. Read daytrading books often My favonte book for getting encouragement is Fnedtertig's "Secrets ofSuccessful Daytraders", followed by Schwager's "New Market Wizards" and Patels' “Mind of a Trader". For themechanics of daytracing successfully, | like Tony O7's "Stock Trading Wizarc" Find books that you believe canhelp you, highlight them with a college-type highlighter, and translate the concepts into specific trading strategiesin your personal daytrading plan.
8. Find other daytraders in your area to network with. A great example is "Daytracers of Orange County", nowwww. worldwidetraders.com, they have emails of other traders in your area of each state (or call a local brokerand see who they might know). Attend occasional meetings for energy, ideas, sympathy, and learning.Daytrading can be the wolrd's most lonely profession, se it's impertant for you to connect with other traders. Thechatrooms are an okay social substitute, but most do not post good calls.
9. Commit to your personal success at daytrading. Say to yourself out loud, nght now, "| am a trader" Therenow that wasn't so hard was it? If you laughed when you said it you need to keep saying it til ya believe it. NowSay "I trade for a living I'm serious about it" Finally, say out loud "| will be persistent and keep at it until [learnhow to daytrade for a living. It might take awhile, but | will get there intime. As limprove my tracing skills, | willexpect to make higher profits, which | will spend on (your choice)." Clearly identify personal benefits todaytrading.
10. Make a list of helpful daytrading behaviors for your trading style: jot down what you do and how you feel
when you're in common daytrading situations doing research, looking for a trade, when you're in a trade, how it
feels when you exit with a nice profit, how you feel when you take a stop. See what thoughts are going throughyour mind in each of these situations and what you can do to deal with it the best you can. It helps.
$
These tips should help your trading results, let me know how they work for you.Module The Menta) Game of Daywading: @PREVIOUS NEXT beBack tc
MODULE 3* Developing the Skill, Patience, Discipline and Attitude ta Succeed at Daytrading
« Acombination of "Successful Trader Characteristics" exists that all of us need to continuallywork towards improving.
« Ifyou want to succeed at trading, you have to make a personal commitment to look at thingsfrom a different perspective, and to change some of your habits and viewpoints. “If you always.do what you've always done you'll always get whal you've always gotten”. | assurne you wart togain financial independence, or at least healthy profits for all the learning and work and duesyou've paid, right?
« itis not easy to change and improve one's skills, in any endeavor. A particularly challengingfield like "becoming a surgeon” or "trading the financial markets" or "getting into a greatmariage" takes a lot of sacrifice and hard work
« Professionals, those of us who do this to pay the rent, have invested hundreds of hours of ourtime and many months of intensive effort to prepare and learn how to do this right. Months ofdetermination and expectation of success 1s needed. Few will have the energy or patience tomake this part of how you make yaur living Again, look at it as @ reqular college pracram, buttougher. ‘rou have to commit the time and energy to it
« This lesson will ask you to do a self-assessment (which you might want to re-take in a few:months) to help you identify your temperament and current progress for being an effectivetrader. Identifying areas for improvernent can help you focus your energy more effectively onthose things you should strengthen. It's a journey, we're always striving to improve all of these.
Successful Trader Characteristics
    
Patience Discipline
Trading Skills
  
Personal Attitude
How Can Each of These Help You Make Profitable Trades?
Patience: Discipline:= To not chase stock or enter bad = To get out of bad trades quicklytrades out of boredome instead of riding them inte the= To let 4 good trade mature, not ground, losing or tying up yourtaking profit tao scon, too small. capital.
= To take healthy, regular profits out ofTrading Skills: your winning trades.» Learning intermediate and Personal Attitude:advanced techniques will help
you stay in the game longer. = Expect to succeed, given practice,« Add skills that you are weak in, learning, concentration and a
and maintain consistency in the systematic, logical approach.
ones you are already good at. = Become focused on making ita
Take the skills assessment below professional-quality effort, treating it
as a starting place like you would any serious career.
Trading Self-Assessment: How Well Prepared Are you To Compete Right Now?
Jot down your answers to each of the following 12 questions to help determine your currentlevel of readiness for trading the financial markets Use itto pinpoint your personal tradingstrengths and areas for improvement Take it periodically to assess progress
Rate yourself on a 1-10 scale on each of the following questions
 
I'm not yet good at I'm ok at this, Im excellent atthis, I need a lot of sometimes | do this and couldwork in this area well at it teach others
1... 1DPatiencePatience
#1. | am by nature a patient person and canwait for things to happen
 
#2.| have a good sense of timing for stocksand usually wait for the best time to buy and thebest time to sell
 
#3. | arm realistic with myself regarding myexpectations from trading and am patientenough to learn how to do it right
 
 
 
Discipline
 
#4. VVhen | am wrong in a trade | canrecognize it, acrit it, and have the disciplineto sell at a small loss
 
#5. | am decisive and can enter and exitpositions based on technical indicators andMomentum. iy emotions are under controland | am a disciplined trader.
 
#6 | am disciplined enough to learn andapply professional trading techniques. |displine myself to learn from my mistakes.
 
 
 
 
 
 
 
 
 
 
 Trading Skills
 
#7. | am @ good technical analyst, and candescibe to others when and how to use chartpatterns, and at least 3 indicators (RSI,Stochastics, MACD}
 
#8. | know how to scale up and fade out ofpositions regularly, | add to and sell off partialpositions according to market momentum.
 
#9. NMly trade execution and routing skills aresolid, | can enter and exit round trip pasitionsquickly and wa the right ECN/Selectnetroutes
 
 
 
 
 
 
 
 
 
 
Personal Attitude
 
#10. | realize that to become successful attrading, | need to take a stone coldprofessional non-emotional approach to themarkets and am continuously working to refinemy professionalism in trading skills
#11. | fully expect to be consistently profitableat trading, given time and practice, and am nottreating this like a gambling-type activity. |have cammitted to not repeating my mistakes
 
 
#12. | know thatitis critical for me to developthe ability to take small stops, and | am ableand willing to not ride positions down “hopingthey'll come back someday’, or committingother basic trading errors. | expect to win
 
 
 
My Score (120 Max Points Possible):
 
Traders' Self-Assessment Scoring Key:
120-100: You have all the right stuff (or at least you say you dol}, you should be consistentlyprofitable and making a healthy income from your trading activities. Be sure to maintain yoursuccessful habits so that you don't "backslide"
30-100: You're a solid trader with some useful skills that you've developed. \Vhile youseem to have excellent skills in some areas, other areas need improvement Spend some timefocusing on how to build those areas that you gave yourself low marks in Frequently, traders will telltme that they're dood in several categories but may be weak in the "Patience" department, whichcosts opportunity (eg taking profits toa soon, while they're only 20-30% of the max available). Slowlybuild up the skills.
50-80: You've got a good basic start on some of the skills thet are needed; however it takesawhile to get highly successful. Be sure to practice with small shares (eg 100-share lots) so that youlearn the mechanics of how to trade, and you become aware of how to manage your ermotions andbuild trading discipline over time. Allis not lost - this is a Good place to start from.
12-50: Have you considered a nice mutual fund? | heer Vanguard and Fidelity have somegood ones, yau can let therm manage your money for you withaut worrying about all this trading stufflOf course, I'll make more Yoage in a week than they they do in a year, but hey! That's their job right?
lhope this is a uSeful assessment for you; keep working on those areas you feel are limiting yourtrading profits, place reminders around your trading area, and good trading!Module [he Mental Game of Daytrading: “@PREVIOUS NEXTThree
Back toMODULE 3
* What yau should be daing first thing in the moming before the market apens
@ Main Points:
e Inaddition to all the information we have trom the orginal Module 1 page on“A Day in The Life", which you should take 4 minute to review now, there are@ few cther things we should consider prior to the market's open.
« The focus of this lesson will be on the mental preparation that | encourageyou to get in the habit of doing prior to each new trading day.
We've already said you should do the following:
« tumon CNBC to see what the futures are doing and listen to the talking
heads
you've scanned the headlines at httn/Awwa.chs.marketwatch.com, | alsa look
at jagnotes com to see what the latest upfdowngrades and commentaries
are
you've got your cormputer on and all your quotefbroker software is set up
correctly.
you've put potential "daily picks" in your watch portfolio to keep an eye on.
you've looked for prernarket gaps on volume of at least 20k shares
e you've already eaten something for energy and maybe have some coffee‘You definitely need a large (16 07) glass of water by your side throughout thetrading day, the brain works hard and stirnulates thirst during trading, wateris better than coffee, though | crink both.
What's next?
 
« Your game. The mental frame of mind that you should put yourself in prior totrading. Let's see how it should wark
The first thing you shouldbe asking yourself is:
Am | Reaily Ready toTrade this morning?
  
If you're not in the mental frame of mind to be an active trader on one particular day,don't push yourself. Take a rest, take a break. Do not feel pressured to trade
Trade only when you can devote 100% of your mind and body to the trade;anything less will usually result in losses
Ask yourself each moming: Have you done your research, do you have 3-5 likely picksin mind, and you're alert and ready to trade? If the answer is no, then go for a walk,come back and do some research, and decide again whether you are going to tradethat day. It's fine to take an occasional day off, in fact | recornmend it.
Premarket Checklist of "Mental Things to Do" To Get Ready forDaytrading:
Here's @ few ‘menial reminder-iype fevanies thet | find helpful, hopefully some of fhem willbenefit you as well.
1. Tell yourself that your trading is your business opporlunity to provide for your farnily andyourself Itis nota casino You should fully expect (not hope} to make money in my trades Formyself, lam running a small SOHO (small officefhome office) business here, and | take Itseriously. | trade to pay the rent.
2. Reviewing the market and sector indexes for the past 10 days, while listening to the CNBCcommentary, | startto put together a "mental map" of likely trade opportunities before themarket opens. | develop several "IF- THEN" scenarios.
3. I'm watching my L2 and Time & Sales tickers for the sector lead stocks to see if| can gaugethe market sentiment in each sector....are they buying, chopping around, or selling?
4. | try to find calm in the frenzy of market activity. tis easy to get overwhelmed by the data outthere, the key is to assess it professionally and focus on high-percentage likely trades.
Calm used to be difficult, after trading profitanly and consistently the calm comes, it's more amatter of "not being surprised by anything the market does" ...you look at the charts, themomentum, and in a relaxed way say to yourself, "nah - still waiting" or “almost ready" or "this15 a good trade, | shauld pull the trigger here".
After a while you get that sense of when the trade is a correct one, you dor't think you'reguessing. And if you're wrang, your small stops save you and you look for a better entry. Or abetter trade somewhere else.
5.1 fully realize that my success depends on my ability to get in and get out fast, with smallstops and larger profits. This ratio, adjusted for brokerage costs, must be maintained for me tobe able to do this for a living. Tightening up the trades for the day is important. For myoccasional swing trades, like VISX HRL DBCC CCL TLU HET SPLS etc, | realize that mysuccess depends on my ability to be a decent chartist, and to roughly know where the marketwill take a stock based on oversold/overbought/volurne and other technical indicators
6.| use analogies that are familiar and comforting to me, like golf. | will see a trade like windingup to drive the ball down the fairway. VVhat do | need to do to avoid missing my target? Whatbad golf and trading habits cause me to miss out? | focus on the ‘zone' | need to be in, thosemoments of clarity and understanding that can only be reached by knowing the stocks youtrade like the back of your hand
For example, | am writing this at 3:50EST, right before the close, an Monday March 27th,2000.1 saw SPLS drop to 20 x 20 1/16th with @ wall of L2 support at 20. | just bought atruckload of SPLS at 20 1/16th and fully expect to swing trade itto sell at 21 1/2 or bettersometime within 10 trading days. | did this nonchalantly and am back writing this 2 minuteslater. | am calm. | know | will profit. Because | trade this stock for a living, | fully expect to makelots of money. It's easy, when you know what you're doing, Notice that from a chartvTAstandpoint the last thing you should do is buy a downtrending stock with no yolume reversalBut, like AT&T anywhere under 50,1 know that SPLS at 20 is always always a buy. So, I'm gladIl be adcling some more profit to my p&.Premarket Game Activity: Ready - Set - Trade!
In the fast-paced, high-stakes world of online trading, your ability to thinkand act fast is an asset. Before the market opens, you might want toconsider usind @ stopwatch to ‘nme’ various things you are doing, to get inthe habit of click-on click-off time-based activities. It's a fun way to getyourself in the right frame of mind to do things quickly, and will train you to.thinkin terms of faster paced action that is needed to daytrade.
Premarket Stop Setting:
Pick 4 stocks you will watch carefully throughout the rmoming trading session. For eachstock, take a minute to write out It's closing price, the 5-day support and resistancelevels, and the maximum stop that you will take - for example if you are trading AOL anddecide to buy on strength at 57, you might want to have a 3/3 point stop.
‘Write this out ahead of the day's trading for the stocks you will most likely be trading, sothat you will take small stops more autornatically, without thinking about it during a livetrade situation. You've already rapped out your trace plan and have identified your stoploss
Also identify where you will sell it at if the trade goes your way - | like to use previous 5-day resistarice areas as places | look to exit a position at. IFit breaks through theresistance line, | may buy it back after It consolidates and holds
Module = [he Mental Game of Daytrading: WPREMIOUS NEXTThree
Back to
MODULE 3« Creating a Successful Trading Environment: What to Put Near Your Monitors”
@ Main Points:
From my previous consulting work with over 137 companies worldwide (salestraining, management & quality consulting etc.), | can say with certainty that yourwork environment, in this case your trading environment, can have a significantimpact on your likelihood of success.
In general, successful people surround themselves with a successful place towork. This includes not only the physical layout and organization of yourworkspace, but perhaps more importantly the people & other suppart resourcesyou have around you.
For successful trading, your tradestation and work ermironment could probablyuse some minor enhancements that will encourage and motivate you to makemore effective trades.
Some traders enjoy being in a room with 5-30 other caytraders. Personally, |like trading from a quiet living room workspace at home with plenty of spacearound me.
This lesson will help you look at ergonomics, layout and other things to placearound your personal cornputer to help you improve your trading results.A Successful Daytraders Work Area;
   
Your Personal Daytrading Workstation Area: ERGONOMICS
fine wath 2 or 3. Get the
 
2. | have 4, but yo
 
« Multiple Monitors. definitely get at lead, 17" minimumard (f0N-Irai pad for a mous:jvel one weth arm