Greeting Ladies and Gentleman: First a little background. I have been working in the financial industry for a couple of years (not trading related job) and have been a successful part-time swing trader. I do not have any actual day trading experience and swing trading strategies do not apply as much intraday. I have been doing alot of research the past year, reading books, forums, journals and picking up all the information I could possibly get. Unfortunately I do not have a mentor and have been learning everything on my own making this a very slow error filled process for me. As you all know, one can read books and manuals about trading for the rest of his/her life and still not become a trader, so I figured its time to learn using one of the most reliable methods available to me. That method is trading, going at it day after day getting screen time and real experience. I do have a day job for now, I took a couple of weeks off to trade in my life sim-account and I am planning to document these two weeks because I believe they will do more for me then any book can. From what I have been reading in the journals and discussions of more experience traders, I noticed one common factor and that is that they evolved away from indicators and came to the conclusion that price action is all one need and everything else is more of a distraction. So I though I'll try to learn correct from the start using the less is more approach. In all my trades I only use PA, volume and 20 EMA. I am not sure if I am doing myself a disservice by not using more indicators or L2, but I don't want to complicate things too much at my level. Right now, the purpose of this journal is not to show an improving p/l and profitability. The purpose is for me to get the "right" thought/analysis process going. Each day for the next two weeks I will be posting charts with my comment on them. One chart will be BBY, a stock that I will be trading on daily basis and another stock will be a "flavor of the day" stock that got on my radar due to some sort of news. Personally I will be looking at more charts, but I will be posting only two so not to flood the journal. I know some of you are already saying "oi vey its another newb journal!!", but please don't flame and leave me a comment if you have anything to say. I am sure I have multiple issues and make silliest mistakes and I would really appreciate any input you can give me. Thank you all.
SWN is my "flavor of the day" stock. It was trending up all day due to a Goldman update, but I still managed to make a 101 mistake and go against what market is telling me. obviously its easier to say once the chart is complete, but fulled me at the time it was just developing
BBY is my daily grind stock that I will trade everyday based of PA, unfortunately it did not have much activity today providing me with little practise opportunity. It started with a strong trend down and ended with a light trend up that was pretty much it for the whole day.
. I think the reasons for entering into a trade for days or weeks are different from reasons for entering into a minute or an hour trade. I think one of the main issues is the tight stops that come with day trading. PA that is not so significant for a swing trade is very significant for a day trade since everything is under the microscope. This change in approach is difficult for me and i hope this journal will help me to fix approach in looking at the PA and analyzing it.
If you are using S&R to enter and exit a trade, it is a matter of price range from the daily to the 1 minute chart. How are you determining what your risk is? Were you not using PA with swing trades?
I agree with you, PA and S&R are still the main tools, but the approach feels different to me because there is less "breathing room".
Yes, day trading requires precision and, IMHO, makes you a better trader all around. When I started out I only swing traded and frankly the "breathing room" made me sloppy. Day trading turned me into a sniper, though it took a long time (and months in my sim account), but at this point I feel that I could day trade just about anything successfully. I'm able to wait patiently, pounce on the opportunity, and set a tight stop for protection. If you're patient enough and focused enough to wait for a true opportunity, the tight stop is almost always survivable. Then the biggest challenge becomes letting winners run.
Why the move from swing to day trading? Swing takes a few hours a day and not necessarily when the market is open. Day trading requires your very focused attention every minute of the trading day. Your decision making while swing trading is at a very relaxed pace. Decisions can be made while the market is closed. Yes you have the risk of an overnight hold but you also have the time to plan your moves the next day. Being successful at swing trading is a bonus. Being successful at any kind of trading is a bonus . I think you will find that the same set ups will work but much faster. I doubt that your win loss ratio will change much; you will just have more trades. Your broker will thank you. The more information you are willing to share the more specific the suggestions will be. Donât be afraid to say why you are taking trades. There is some good help to be had here.
Day 2: Today my "flavor of the day" stock was AAPL. I know its a favorite of many traders who are used to the way AAPL moves, but I am not familiar with the daily moves of this stock and have chosen this stock today because of all the iPad/Verizon talk, thinking that the news will generate some trends. Well things did not go as planned(big surprise there ), so far I can pin point two of the most important issues: 1) My interpretation of what is happening might be completely wrong. See point one on the chart screenshot with what I perceived as a possible double bottom and point 3 with what I interpreted as a small pullback that never came. 2) Point 2 on my chart: I read that move correctly, but I was not certain how to set a profit target for that small move given no clear Support or trend line. I would appreciate if someone can maybe point at some obvious mistakes that I am making in my analysis. ** please keep in mind that the decision which I am journaling are made during the trading hours and not after when the chart is complete.