in massage that swivels,very comfortable and effective}, get ergonomic keyboard and mouse (| use a legalpad for a mouse pad, best idea I've ever had, | write my day's trades on it w/notesetc)
Change your monitor and computer setup: perhaps change from one wvall of theroam you're in to another wall, reconfigure the tables and chair Above all, make itcomfortable and clean. A cluttered trading enwronmentis bad for you.
Add motivational posters and sayings to your trade area. | use a coffee mug fromSuecessories that says "Expect to Win". | do. Also, have reminders posted to yourmonitors (I have "Tight Stops - No Exceptions” posted and it still helps me toremember to get out fast when I'm wrong). Read Tony Robbins’ books over and overagain. If you really get into it, you'll start to believe, and make it happen. Expectsuccess of yourself, and be willing ta "do it right" to achieve your goals.
oO Tip #90: Ok|'ll say it again: Resolve to Keep Small Stops, and Use Trailing Stops toLock in Profits on the Way Up. Discpline, discipline, and more discipline.
 
Anyone teaching about daytrading can't say this enough, because more people say they'll do itbut waffle when they're in a trade and lose their money than | can keep track of. your tradingshould be highly mechanical, not emotional. Systerrbased.
This is @ game that requires absolute discipline, concentration, and rapid decision-makingabilities. If you cannot do this, then put your money in a mutual fund and go work for another man.for a living.
Personally, the thought of putting up with the bs thet goes on at most companies (and the horrificloss of personal time that goes with a 8-10 hour day job) is a trernendous motivator for me toabide by the rules of this gare. Life 1s too short to spend any ammount of it working in someoneelse's office. Being your own boss is exhilarating. Ran my own training business here in Hawaiifor a few years, over 130 clients, now daytrading full time. It's great.
Having time to golf, spend with my new baby and wife, and enjay shopping and fine dining herein Honolulu is a"drearn life" that | do not want to sacrifice. Daytrading enables this lifestyle, theprice is intense study, continuous learning and commitment to follow the rules.
Expect success from your efforts Commit to changing your life Itcan happen, if you're strongenough. Most people aren't. Good luck with it.ModuleThree
The Mental Game of Daytrading
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Back toMODULE 3
« Setting Daily Profit and Lass Targets: How to Know When to Hald, When to Fold
e Developing the skills to know the best pricetotake a stop loss or take profits at takes.plenty of practice. Nobody ever gets theéxact top and bottom consistertly, your goalshould be to take a piece of the pricemovement off the table as profit for goodtraces and/or exit the trade at a minimal lossif you're wrong.
One of your best tools in this area, besidesknowing the 10-day support and resistancelevels, and intraday volurne and range, isyour own sense of when the stock isoverextended or oversold and “looksgood" to you for a buy or sell. In daytracing,we look for the extremes and playretracements off the extremes. The obviousexample is an opening gap up or gap down,eg if the futures are -15 or worse on the open(a rare occurrence} you'd expect somebuying, with a retracement into the singledigits, as stock prices "look cheap" totraders and institutional investorsRemember, what “looks good" to a
professional is typically more of anextreme than what "looks good" toabeginner. If my stock is up over 12% on theday, I'll look to sell. If a stock is down over 5%onthe day around 10°20 on no news, | maybe looking to buy.
Many people say you should not have profittargets and to ‘let the stock tell you’ when it'stime to sell. Rubbish. If your stock trade 1saver 5-10% in your favor then take a profit,eg you bought at 20 and it's now at 21 3/4 or22 1/2...I'¢ look to take the profit, or at leastsell half your position to lock in the profit and‘wait and see’ for the rest of your position,using a trailing stop.
¥PROFIT AND LOSS TARGET GUIDELINES for TRADERS: &
Ifthe loss is over 1-2% against you, eg youbought at 20 and now it's 19 3f4 anddropping, look to stop out and wait for alower entry price You can always buy thestack back.. the commissionis aninsignificant percentage of your totalpotential gain or loss....get in the habit ofbuying, stopping out small, taking profitshealthy, and you'll be a successful trader.Taking small stops continues to be the #1challenge for virtually all traders; we needto put tracing rules in place to help us havethe discipline to exit a losing trade quickly,and re-enter when the price has stabilizedand is back on the upswing {it may not betil another trading day).
Each trading day is it's own "world", spendalot more time than you curreritly dolooking at the daily composite charts($COMPG, $SPX, STRING/STICK) as wellas sector charts like $RLX $SOX $6INThis tells you you if there's more net buying‘or selling, along with the trend, for the
group of stocks that you are trading. Theyare major incicators that you should use todetermine money flow cirection; far toomany traders ignore the sector and marketindexes, focusing only on their stocks"intraday charts. The major indexes canhelp you see the overall direction of themarket, which you should pay a lot ofattention to
Determining support and resistance levelswill help you decide where your stops andprofit targets should be, remember to stayat least 1/4 point ahead of the market inyour liming so that you can sell into buyingstrength and buy on panic dips and buys.
Migre.a
Deciding When You're Going to SELL is MUCHMore Important than When you're going to Buye Unlike conventional trading, you should spend 80% of your time and energy figuringout where you will sell and 20% of the time on where to buy. Most traders have itwrong and put 4 ton of energy into figuring out where to buy, with little energy beingspent on managing the more important Sell side of the transaction
Try setting sell targets at slightly under where you bought (for stop losses} and usetrailing stops to lock in profits. Stay 4 spread or two under the average "wiggle" inthe stock price, eg ifit wiggles in 16ths in a 1/4-point wide band on the way up, usea trailing stop right under the 'wiggle/shake' area
Managing the sell side of your stock trades is much more important to yoursuccess as a trader than managing the buy side. Most traders fail at this
Set Your Targets BEFORE You Trade
« Most traders do a haphazard job at best in this critical area - impulsively buying nearthe top of a stock, getting shaken out or taking a loss
« By "set your targets before you trade" | mean WRITE THEM DOVVN IN FRONT OFYOU on a piece of paper. where is your stop loss, where will you sell to lock in profit?
If you are trading in size, over 500 shares, jot down a quick note of how you will scaleout of the position as the price goes up. Vvhat's your strategy? Make sure to haveone
If You Can‘t Keep Your Targets, Make YourSoftware/Broker Do It For You
« Most software platforms, including Cyberx, Datek and others, let you set stop lossesand sell prices to automatically trigger for you.
« Many people like to go with "Mental stops". This is fine if you're experienced and
scalping teenies or flipping 1/4s and 1/8ths, but if you're newintermediate you really
should use mechanical stops at first. At least for sore of your trades.
Experiment with the software, | get frequent trader questions from peaple who need to
know the basics of what a Sell limit order vs market order etc. 1s. Please see the help
resources available at your broker and call them to ask them to explain how their
particular software platfarm works to help you set stop limit orders, Use them
Scale In and Out of Positions Using Targets
« When you're trading more than 500 shares or so, you should scale in and out of positions,unless an unusually large move warrants immediate action on the entire lot
« SCALING IN: Vhen you buy a stock that's going up and you add more stock/buy more asthe price keeps going up. This is for those rare occasions when you've "caught 4 runnerearly in 4 breakout" and there's still a lot of upside left, in your opinion. You might also scaleinas an "Average down' on yery rare occasions for swing trades, but remember yourpyramid must be built with larger positions at successively lower prices, vs incrementaladds on the way down (more on this strategy in a later lesson).
« SCALING OUT: This is when you are gradually selling off your position a bit at a time, letssay you have 1000 DELL at 52 1/16th and the price is up to 52 5/8 from your buy point, youmight want to sell S00 at the 5/8 and wait to see where the price goes before selling therest of your position Ifthe level 2 shows thin support at 1/2 and the price starts to drop,then you might close out the balance of your position at the 1/2, locking in profit before theprice crops Or, if the price keeps running up you might sell at 7/6, taking profits of 500shares at 5/8 and 500 shares at 7/3« Use targets to determine ahead of time how you will manage your scale-in and scale-outtrades. This 1s particularly important in the case of stock going against you, you might scaleout most of your position at the initial stop, say 800/1000 shares, keeping 2010 to see if youget a bounce .... ifit doesn’t bounce where you thought it would, then sell off the remaining200 and wait for a consolidation before buying back in again
The Mental Game of Trading andthe Successful Use of Trading Targets
 
« Does trading occasionally cause stress foryou and get on your nerves?
» [have found that it brings much calm and orderwhen | haye designed the borders for mytrades ahead of time: the borders being mystops and exit targets
+ [t's also a useful trading development tool, asyou can look back over the charts and tradestops/profits to see where you stopped out toosoon or too late and where you took profits toosoon or too late
» Totrade consistently for a living and have anet profit at trading absolutely requires 2 longstring of base hits vs. home runs. Your tradingstops and targets will help you decide when to Ifthe cards are against you in a trade after you'vetake profits and when to stay in the trade. ante'd up then give up the trade, take a small hit,« Use targets to determine ahead of time how you will manage your scale-in and scale-out
trades. This 1s parlicularly important in the case of stock going against you, you might scaleout mast of your position at the initial stop, say 800/1000 shares, keeping 200 to see if youGet 4 bounce .... if it doesn’t bounce where you thought it would, then sell off the remaining200 and wait for a consolidation before buying back in again
When to Hold and When to Fold?
Although |'m not a big Kenny Rogers fan, his songcaptures the essence of successful trading insome ways.
You have to decide, ahead of time, when you willlet the ante go to the other fellow (your small 1/4point stop), and when to hold your trade for moreprofit
 
The Mental Game of Trading and
the Successful Use of Trading Targets
+ Does trading occasionally cause stress foryou and get on your nerves?
« | have found that it brings much calm and orderwhen | have designed the borders for mytrades ahead of time: the borders being mystops and exit targets.
It's also a useful tracing development tool, asyou can look back over the charts and tradestops/profits to see where you stopped out toosoon or too late and where you took profits toa.soon or too late
« Totrade consistently far a living and have anet profit at tracing absolutely requires 4 longstring of base hits vs. home runs. Your tradingstops and targets will help you decide when totake profits and when to stay in the tradeintemalize them. Your trading must bring out
your best, most competitive expect-to-winqualities. Use trading as a vehicle to help yougain financial independence and to developthese important personal successcharacteristics
 
When to Hold and When to Fold?
Although |'m not a big Kenny Rogers fan, his songcaptures the essence of successful trading insome ways
‘You have to decide, ahead of time, when you willlet the ante go to the other fellow (your small 1/4paint stop}, and when to hold your trade for moreprofit.
If tne cards are against you in a trade after you'veante'd up then give up the trade, take a small hit,ModuleThree
Ihe Mental Game of Daytradiing:
Back toMODULE 3
« Becoming @ Better Trader: Having Patience with Yourself
@ Main Points:
After discipline, patience Is the second-most Important personal skill to develope your trading profits
       
ample, beand use a
s have no place in our trading seughl)
at and profit targce, lat's look at a fi
all help Buildaw ideas,
  
thougrin daytrading, much of our impatience comes
from @ sense of “nat knowing what to doThis can ba the 90% of tha time you'reood plesng frustrated that yount made a lot of good trades lately, or itmay come from the greed to take quickprofits when you should let the trade sit longerso you can book a bigger pratit
Determining support and resistance levels,along with patterns, such as cup and handles,breakouts from trading ranges, tradingchannels and trends, are all key in helping youdecide if you're being too hasty or too slow interms of your patience with a trade.
     
 
Patience should not be confused with takinglarge losses or letting a trade get away fromyou with 4 stop that's inappropriate for thetrade timeframe (scalp/day/swingfposition}and number of shares you're trading,however.
Don't "be patient" with a stock whoseprice is falling, for example Sell at a tinystop and patiently wait for a better time toenter the trade, if opportunity presents itself.Be patient with a stock whose price islocking In profits with a trailing stop.
 
2 IN TYING New
    
        
Personal patience can be enhancnumber of simple @S, such ascounting to or Slowdy reading oday's closing price for e
trading days in on
  
   
 
small profits« to aver overtrading and commissionchurnvoid antering bad trades8 more p ssional tradingte , ike buy ng at theselling atthe ask
 
   
   
Why is patience importantwelop y ersonal trading
       
   
time and energy to trading patienceExceptions for taking fast profits: when a stockjUMps up over 15% or more you should set astop right under the peak, or sell into buyers....but those are rare occurrences. Below is anexample frarn March 29, 2000 on how selling aspike is fine, and patience is not called for{compelling immediate profits are always goodto takel):
[stock | Boucht [Shar [Sod] | rin
 
Defining your time horizon and profit/sell targets prior toentering the trade will let you know if you're being “patientenough" as well. If you're buying a stock that's just been cutinhalf on bad earnings, for example, I'd set a 15%-25%retracemnent sell target, eg it goes from 60 to 30, you buy at 301/4, the sell target might be 34-36 or so for a swing trade and
maybe 31-32 on a day trade
Trading Areas to Develop Patience In:
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$262 profit taken onsmall HAL swingtrade March 292000.
Sell signal: 16%price spike on nonews, time to selfand rebuy onpultbeck.Personal Learning
© Almost all traders I work with underestimatehow much there is to leet about treding stocksfor profits - have patience with yourself
© You should read at least 15 books on stocktrading, highlight them, make notes and developyour cum set of trading tips. Most. of the backsate too basic, but they do offer a starting place
© Going up ageinst the stock market unarmed withdetailed trading shills leads to finenciel losses -the success is in the detaiis of leaming how totrade.
© Tohelp develop patience in this area, trymaking ¢ commitment for how many hours eachweek you will set aside to lea our DTUcoritent and content from other sources.
When to Buy
Avoiding choppy or low-percentage trades isan important success skill. Most of the time,ycu will be watching the charts, not activelytrading. Figuring out when a breekthrough orreversal is about to occur is the skill to workon.
© Yvhen to buy? It's always better to avoidquestionable entries and wait a bit beforeplunging into a trade because youre bored orbecause of g enbe or chatroom call,
« Since it's your money, be very careful beforeyou hit the ‘buy’ button. Enter your positions insmall increments, eg start with 100-300 sharesand build the position up from there, dont justJump in to buy 1K unless it’s really on fire, ararity.
Try calling the intraday tops and bottoms ofyour stocks by papertrading, based on the 3-6day support and resistance, as 2 skill-buildingactivity.
 
 
Stock ResearchVTA/DD
© Many traders want chat room and site picks vs_doing their ownstock research This is a mistake. You need to be anindependent, strong trader, not using a crutch of other people'sstock picks, many of which are incorrect anyways
Leaming Technical Analysis 1s a core trading requirement andtakes months of study. We provide patterns and training here atthe site to help out, it will take you many hours of practice andmarket watching before you can cerrectly identifycverbought/oversolditrending stocks that you can tradeprofitably.
To develop petience here, use our worksheets and othermaterials you develop yourself to help you decide what the buyand sell signals are for stocks that you are watching or trading
When to Sell
Traders’ success depends largely on their sell decisions.Sometimes it is difficult to hold a stock that is showing adecert profit. Other times it is difficult to sell a stock thatis showing a small loss You must leam to do bothconsistently, and professionally
Depending on your trade time horizon, you should look atsupport and resistance levels, trends and volatility to helpyou determine when you have gotten enough profit out ofyour trades, or when to cut a loss.
I have found that selling when the stock is up over 12% forthe day, or when it fails to rake a higher top after 10:10.am for ayemight holds etc. are good times to sell. Sellingfast with profits in your pocket is an effective strategy.Jhave lose when Ive held on “just a bit longer” for intradaytrade selling decisions The time to sell is on a minorshake after the stock has run up in your favor a fairamcunt. Example, you buy DCLK. at 81 and it's up to 881/2, you might set a trailing stop at 66 or 67 1/2 and closethe position before if turns against you and trades down to83
Trade Time Horizon vs # Shares
« FIRST GUESTION TO ANSWER: if! buy this stock, how long am |willing to hold it to show a profit? What are my stop and profittargets?
*® SECOND QUESTIONS Is this the best price level I'm likely to get forthis stock on this trading day, or can | get a better price by enteringafter lunch selling is done?
e THIRD QUESTION: How many technical and momenturn indicatorsare lined up te support my decision to trade this stock?
e FOURTH QUESTION: How many shares will | buy? Should | “scalein" to the position by buying @ few hundred here and adding, orshould | buy the whole position at once?
* These are the types of questions you should be asking yourself,and yes they require patience, plenty of it!
* To help develop patience in this areas, think of the matket like 2professional does: we dont get excited aver much of anything, weknow the ranges and behaviors of a handful of stocks we traderegularly, and we are on the casual lookout for high-percentageopportunities.
e Example: I'm a SPLS trader end buy from 18-20 and sell fromm 21-23, on swing trades. If 'm daytrading it, | look for MSCO on theinside bid and know that it gets it's first peak around 10am, so | lookto buy on open or wait til affer lunch if i's still showing strengthThat's about it. No magic, no uncertainty, | Know this stock ancprofit from it 90% of the time | trade it. I's not exciting It's a jot. |know how to produce money trading this stack
For yourself, focus on just a handful of stocks you want to trade thatheve nice volatility (but not too much, like SPYG MSTR GENE etc,unless youre an experlenced trader). Put the hard work, disciplineand patience needed into understanding what these stocks doMOST of THE TIME. That way, you're not surprised by the stock,and can reliably choose good buy and sel price levels.
That's how you trade, folks - realize when there's a good pricelevel to be had, and buy it. Or, realize when there's a lot of tracingexcitement in the stock AND THERE'S STILL LIKELY TO BEENOUGH FOR YOU TO PROFIT FROM IN THE NEXT 15MINUTES. A bit istake | see far too many arnateur chatroorn:traders make is to enter WAY too LATE. You should skepticallylook at a chart and say to yourself things like "yes the PMTCentry Would Have Been Good, way back at 11 3/4, now it's at 1278 and most of the momentum is out of the stock, | Should Netbuy here" Don't buy stock at 10.00am, in general, that’s when |sell most of my stock, | like to buy on down days around 10:30 forthe bounce, if we started off on a down day, or play the afternoonshort cover rallies and bounces.
Patience to NOT TRADE is the most important one to develop.Study all the examples at DTU and try to see things from a prosstandpoint why do we care aboul a stock, how closely do wehave to fine-tune our trades to make them profitable?
Patience to Let Your Winners Run (for Swing trades only!) is thesecond-most important.
Nibble at the market consistently, don't wait for home run $1000trades all the time. | am happy to exit 2 trade of 100-300 shareswith a $160 - $350 profit. With 1K shares | want $600-$800 ormore. (unless | am tick scalping, in which case the $125s 1/3thpoint on 1H, shares is fine).
Do Not Be Patient when it Comes to Small Stops, howeverllllDon't stay In a losing trade and say to yourself “I need to bepatient with it". Ifit's a daytrade, take the small loss and wait for abetter entry. Like | said, you can try to enter the position 2-3times on the way down waiting for a bottom, with 116th - 1/8thpoint stops. No big deal Or, buy breakouts and set the stop rightunder the support line.
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Back toMODULE 3
 
+ Knowing the Rules of The Game and Follawing Them - Daytading Discipline Tips
@ Main Points:
e Becoming a “disciplined trader’ is the biggest challenge you will have to overcome if you are tosucceed, You can learn all the tools and strategies, but if you lack the discipline to enter andexit trades mechanically based on the signals we teach, all is lost
What do we do about it? Peopte are remarkably slow to change, and so | find it takes morethan just telling people to be disciplined. it 's helpful to include “systems"-type changes in yourtrading environment to make disciplined trading more natural for you, more automatic. For thefellow trekkers out there, in trading you have to be Spock, not Kirk. Be Kirk when you'respending the money, be Spock to earn it. Sound right?
Like any business, using and acting on metrics (measurements), are critical to success hereKnow when to hold and when to fold, know when to sweep profits off the table, know when tocut a loss small and try again. You can always buy the stock again, just “sit out" downtrends andbuy on strength, Nassar said it well in his How fo Gel Started in Electronic Daytrading bookthat "stops are like fences to help the trader know when to enter and ext positions”
« | find that using "Visual Reminders" on the wall is 2 big help for me to maintain my disciplineand focus for trading. Trading for consistent profits requires you to be businesslike andprofessional, not ike a gambier walking into a casino (even pro gamblers have predefined winand loss limits they follow, which ts more than most neve tracers have)
« Develop these in Powerpoint or Word, print them out and tape them to the edges of yourmonitors. My personal favorites are:
"Tight Stops - NO EXCEPTIONS",
"Critical to Your Success: Sell at SMALL STOPS"
"Do You Buy or Sell stocks Today? Is the Nasdaq/S&P Green or Red?"“High-Percentage Daytrading for Daily Profits is Required"
"Discipline --> Success"
"Become Wealthy. Just Do It"
 
Also keep some of your trade records posted to the walls, both winners and losers, soyou can see what happened "by chance" vs. what happened because of a system youfollowed. Make your losses count for something, learn from the losses and developcountermeasures where possible to avoid repeating the mistake in the future Over time, youshould develop a set of disciplined trading skills that serves you well, based on previouswinners and losers
All dood traders will tell you discipline is the key to success, this lesson will share other tips onhow you can develop the mindset of a disciplined trader. There's a good book out by the sametitle, Schwagers "Intro to Technical Analysis" also has @ superb chapter on 62 trading rules ..a‘must buy’ book. Look at these resources, they can help your trading.
Setting trade alerts is also useful, have your software flag you when your stock has met a profittarget or a stop paint. Also using time of day patterns to your advantage will help (eg knowingthat the market usually weakens from 1130-1 30, or our 10-10:30 nasdaq bounce etc).
 
First: Define your own personal specific “disciplined trading" areas for improvement - Checkall that apply.As a trader, | know based an my losses | need fo work on improving these specific skilis.
___ Due Diligence (DD) | need to do 4 better job of my own stock research, vs relying on chatraomsor stock picking Services to pick my stocks, | need to learn haw to pick high-percentage stocks.
___ Basie Technical Analysis (TA) : Being able to correctly identify supportresistance levels &trendlines
____ Advanced TA: Knowing how to interpret and use RSI, stochastics, MACD and sector indexes
 
___ Entering Trades Effectively - Buying Tops and Bottoms: | need to do a better job of notbuying false bottoms’ or buying the hich of the day for my trades
___ Exiting Trades Effectively - Using Stop Losses: | need to predetermine stop loss limits withmore discipline and stop letting stocks ga too far against me
___ Exiting Trades Effectively - Selling Too Soon: | need to develop disciplined patience to let mywinners run, so | do not take a small profit instead of a large profit
___ Learning from My Successes and Failures: The only bad failure is one that's repeated overand over again. | learn how to improve my trading based on my experiences, refining my tradingapproach over time until it becomes more systematic and less ernotional and hunch-based
In looking at the list, to this day | still check “all of the above" (except for DD), it's a career process
Second: Make a personal commitment to yourself to change into a highly disciplined, efficienttrader. Atleast for 80% of your tradesYou need to make a decision to run this like a business. It's not “fun, hey look my stock went up", inthe long run only those of us who take it seriously are still daingit 5 years later Plan on trading for the
next 5 years, profitably.
What do you need to do differently to run your personal "daytrading business" so that it issuccessful? Like any business, it involves hard work. Lots of self-study, practice, papertrading andsmall-share (100-200) trades to get the hang of mastering your emotions without it costing you a lot if
you're wrong.
Add a brief trading log (journal) to your weekly trading habits, make |t very brief and easy to follow,there are numerous downloadable powerpoint example logs in Modules 1 and 2 you can use to startwith. Look for patterns in your winning vs losing trades, identify and eliminate bad tradingbehaviors (like learning how to golf, it's tough to break bad habits sometimes).
Discipline: Avoid most chatrooms. Bewareof bad "idiot traciers" out there, hucksters andprofessional market makers. Take the time tolearn how to trade correctly.
Please do not log into chat rooms to fallowsheep into bad low-percentage trades. If youmust use chat rooms, learn from the few goodeducationally-oriented rooms, the "why wasthat a good trade, what were the indicatorswe used?" type of rooms. If they play cheapunder-$20 stocks then beware. lf nobody saysthings like “semi's are strong today, the
$SOX 1s up, the trinis 1.4 andthe $tickis.."etc .. then beware. If they're saying "ELOT isrunning, everyone jump on board...ELOT to410" then press Al-F4 immediately. :o
If you check into those rooms year aver yearyou see a lot of new sheep, a few wolves, veryfew are still there for the long term, becausethey lost all their capital and now they're backat a day job talking about "gee the stockmarket is tough". Dont get whupped. Avoidbad chat rooms. I've spent many weeks inboth free and pay chat rooms, amazed at thelowy level of inforrnation that's dribbled aroundout there. Learn to hear what a professionaltrader sounds