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Summary How to Day Trade for a Living: Tools, Tactics, Money Management, Discipline and Trading Psychology
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How to Day Trade for a LivingA Beginner’s Guide to Tools and Tactics, MoneyManagement, Discipline and Trading Psychology© Andrew Aziz, Ph.D.Day Trader at Bear Bull Traders
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DISCLAIMER:The author and www.BearBullTraders.com (“the Company”), including itsemployees, contractors, shareholders and affiliates, is NOT an investmentadvisory service, a registered investment advisor or a broker-dealer and does notundertake to advise clients on which securities they should buy or sell forthemselves. It must be understood that a very high degree of risk is involved intrading securities. The Company, the authors, the publisher and the affiliates ofthe Company assume no responsibility or liability for trading and investmentresults. Statements on the Company's website and in its publications are made asof the date stated and are subject to change without notice. It should not beassumed that the methods, techniques or indicators presented in these productswill be profitable nor that they will not result in losses. In addition, theindicators, strategies, rules and all other features of the Company's products(collectively, “the Information”) are provided for informational and educationalpurposes only and should not be construed as investment advice. Examplespresented are for educational purposes only. Accordingly, readers should notrely solely on the Information in making any trades or investments. Rather, theyshould use the Information only as a starting point for doing additionalindependent research in order to allow them to form their own opinionsregarding trading and investments. Investors and traders must always consultwith their licensed financial advisors and tax advisors to determine the suitabilityof any investment.
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Table of ContentsChapter 1: IntroductionChapter 2: How Day Trading WorksDay Trading vs. Swing TradingBuying Long, Selling ShortRetail vs. Institutional TradersHigh Frequency Trading (HFT)Trade the Best, Leave the RestChapter 3: Risk and Account ManagementThree-Step Risk ManagementTrading PsychologyChapter 4: How to Find Stocks for TradesStocks in PlayFloat and Market CapPre-Market GappersReal Time Intraday ScansReal Time Volume RadarReal Time Bull Flag Momentum ScannerReal Time Reversal ScannersPlanning the Trade Based on Scanners
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Chapter 5: Tools and PlatformsWhat Broker to Use?Interactive BrokersSureTraderTrading PlatformReal Time Market DataNASDAQ Level 2 and Bid-AskIndicators on my ChartsBuy and Sell OrdersMarket OrdersLimit OrdersMarketable Limit OrdersHotkeysWatchlist and ScannersCommunity of TradersChapter 6: Introduction to CandlesticksPrice Action and Mass PsychologyBullish CandlesticksBearish CandlesticksIndecision CandlesticksSpinning TopsDojis: Simple, Shooting Star, HammerCandlestick Patterns
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Chapter 7: Most Important Day Trading StrategiesTrade Management and Position SizingStrategy 1: ABCD PatternStrategy 2: Bull Flag MomentumStrategies 3 and 4: Reversal TradingBottom ReversalTop ReversalStrategy 5: Moving Average Trend TradingStrategy 6: VWAP TradingStrategy 7: Support or Resistance TradingStrategy 8: Red-to-Green TradingStrategy 9: Opening Range BreakoutsOther Trading StrategiesDevelop Your Own StrategyTrading Based on the Time of DayChapter 8: Step-by-Step to a Successful TradeBuilding a WatchlistTrading Plan (entry, exit, and stop loss)ExecutionHow Did I Do It?Chapter 9: Next Steps for Beginner Traders
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The Seven Fundamentals for Day TradingEducation and Simulated TradingTrading in a SimulatorPreparationHard WorkPatienceDisciplineMentorship and a Community of TradersReflection and ReviewMy Daily Blog and YouTube Video RecapsFinal WordsAndrew’s 11 Rules of Day TradingGlossary
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Chapter 1:IntroductionIn this book, I explain the fundamentals of day trading and how day trading isdifferent from other styles of trading and investing. In the process, I alsodescribe important trading strategies that many traders use each day. This bookis deliberately short so readers will actually finish reading it and not get boredhalfway through and put it to one side. We are all distracted by Internetdiversions, emails, Facebook or Instagram notifications, or the dozens of otherapps that we have on our smartphones or tablets. Therefore, this book is conciseand it is practical.If you are a beginner trader, this book will equip you with an understanding ofwhere to start, how to start, what to expect from day trading, and how you candevelop your own strategy. Simply reading this book will not make you aprofitable trader. Profits in trading do not come from reading one or two books,but, as I will explain later, profits can come with practice, the right tools andsoftware, and proper ongoing education.I have included at the back of this latest edition of my book a handy and helpfulglossary of the most common terms you will come across in day trading. If, asyou are reading this book, you come across a term or phrase that you don’t recallthe meaning of, please go and have a look at its definition in the glossary. I’veused easy to understand language to explain the “lingo” of day traders.Intermediate traders may benefit from this book’s overview of some of theclassic strategies that the majority of retail traders use effectively. If you don’tconsider yourself a novice trader, then you may wish to jump ahead and startreading at Chapter 7 for an overview of the most important day tradingstrategies. However, I encourage you to skim through the earlier chapters aswell. Becoming a consistently profitable trader will not require you to mastercomplicated new trading strategies every day. The strategies in Chapter 7 are theones that traders have used for over a decade. They have worked so far and needto be mastered. Work on simple well-known strategies, but adjust them overtime to complement your own personality and whatever the current marketconditions are. Success in trading is not a revolution, it is an evolution.
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In my opinion, the most important lesson that you can learn from reading thisbook is that you will not get rich quickly by day trading. Day trading is notsimilar to gambling or playing the lottery. This is the most importantmisconception that people have about day trading and I hope you will come tothe same conclusion after reading this book. Day trading looks deceptively easy.Brokers do not normally release customer statistics to the public but, inMassachusetts, a state court did order the release of the records of financialbrokers. Those records indicated that after six months of trading, only 16% ofday traders actually made money. It is very easy to be one of those 84% oftraders who are losing money.This brings you to my first rule of day trading:Rule 1: Day trading is not a strategy to get rich quickly.A very common misconception that people have about day trading is that it iseasy: “buy low, sell high” or “buy the dip, sell the rally”. Again, day tradinglooks deceptively easy, but it is not.If it were that simple, everyone would be a successful trader. You must alwaysremember that day trading is difficult and will not make you rich quickly. If youhave this misconception, and if you want to get rich quickly and easily in thestock market, you should stop reading this book right now and spend the savingsthat you put aside for day trading on a nice family vacation. It would be muchmore satisfying to spend your money that way, rather than losing it in the stockmarket.Having mentioned all of these points, day trading can be a profitable profession.But keep in mind that it’s a highly demanding professional career and mostdefinitely not a casual activity for beginners. It takes time to become aconsistently profitable trader. Many traders will fail in the long and at times fatalday trading learning curve.Chapter 9 focuses on the real actionable steps you must take to successfullyenter the world of day trading, but again beware that day trading demands abrutal learning curve. There are many things that you can do to speed up yourlearning curve. But you unfortunately cannot make the learning curve disappear.Trading in a simulator account is expediting your learning curve exponentially.
