I am a newbie daytrader. I've been dealing with markets for several years, but I've only been day trading full-time for about a month now. I am desperately in need of advice. I am using candlestick charting and level II combined with market indices/indicators such as Nasdaq, Dow Jones, TRIN, TICK to identify potential trade setups. Unfortunately, I am noticing that since I can only track a limited number of stocks at the same time (I have 2 monitors) I am often missing the big moves. Also, the stocks often make their biggest moves very fast and I find that the 5 minute charts are not very useful as by the time the candlestick is formed the stock has already moved too much to enter it. How do you scan/search for stocks that are about to make a decent move (50 cents and up)? Other than RealTick, do you guys use any software to help with the scanning part? What setups do you use? Do you use candlesticks or some other kinda of charting? Any and all help would be highly appreciated. Thanks, Iraf
I used a service called Bigeasyinvestor. It was free now Ameritrade bot them and they chare a monthly fee (I think $20) if this will work for you or not I have no idea, nor do a care. This service is as good as any service out there. They are for sure pretty strong on screening and tech analisys.
Try http://stockcharts.com/def/servlet/SC.scan, they have a very hefty collection of various candlestick scans and it is free. While you can not build your own screen, it comes with more than enough variety and I feel BEI is overpriced for what it does, would rather get something like Metastock with EOD data if I am going to spend $40 a month on BEI. As far as strategies are concerned, there is no silver bullet, perhaps gives us a basic idea of what you have been doing and we may be able to offer some suggestions.
IRAF: Are you really feeling desperate? If so, don't trade, re-group with papertrading. This last few days have been very choppy. You should have a years living expenses(At least six month's) in your trading plan yeilding you patience at the appropriate times. From several years of dealing with the markets, something told you that you are consistent, and ready to change careers, or start one. Think back only one month, and ask yourself, What went wrong, or What has changed my consistency of at least 50 cent moves in my favor? Mentioning the Ticks/Trin/L2/Dow, it sounds like you track more than needed for NAS, but everyone has their own tool box. Consider focusing on a particular market until your papertrades net you 50 cents per day. Do you have the skill to read the specialist, or do you want to? I would master what you know now, not keep moving on looking for new things. Ex: I have a plan trading the NAS. I also have a desire to trade the FX, but I will not spend any time on it until the goals in my trading plan level off. What market are you familiar with? If you trade NAS you can find a list of stocks posted by Tradewinds: http://www.elitetrader.com/vb/showthread.php?threadid=1585 Wait for an intra-day trend, trading range, support/Resistance, and don't fight the NDX. Other than that, this site is jambed with good information. Enough to make anyone successful, and enough to keep one confused. It takes passionate desire to take this information, and put pieces together making your own puzzle netting you a positive expectancy on paper. And that's only the beginning. Then you must understand your personality, and perform under stress. Jeffrey
Thanks for all the replies. I would be interested to know what strategies other people use for daytrading in today's market? Please feel free to share. Thanks, Iraf
try the sidelines. "There is a time for all things, but I didn't know it. And that is precisely what beats so many men on Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. No man can always have adequate reasons for buying and selling stocks daily - or sufficient knowledge to make his play an intelligent play." Jesse Livermore
IRAF, try going 1 time frame lower, 3 min or 1 min. chart. When I started trading only intraday last fall, I thought I could time perfect, low risk entries using the NQ Fut 1 min and 5 min., TICK, L2 and 5, 15 min.charts, tracking a basket of Nas stocks. I would scan manually intraday my "basket" ( still 50 + stocks) for consolidation. Then wait for a signal on L2 in synch with the Fut. I also scan gainers/losers, gap up/down etc. I would like to have the ability to scan for new intraday highs too ( but at that stage anyway it's often too late to enter for me) What I found out is that most of the time, the stock will move before the Fut or the Fut will move but then your stock doesn't move. There is no way around it, I think you have to take a position before the move happens when the Fut is in an uptrend. Don't pay too much attention to L2, for most of us, it's often too late to get in with a .25, 3/8 stop when something shows on L2 ! Unless you are willing to chase momentum and buy 50-75 cents above resistance/ support... Hope this helps
IRAF, Here is my (there are many) approach daytrading in a nutshell and simplified. Determine the expected direction for tomorrow. I find it easier to HAVE a preconceived opinion on what should happen and react appropriately when the scenario begins to unfold. As opposed to reacting to all that does happen during the day. This puts you in the position of letting the market come to you. i.e., If you expect an advance on the dailies/hourlies/10 minute charts, take only longs. And vise versa. If you have the ability please create the following charts 1 minute/25 tick/10 tick chart, apply a 12-26-9 macd to all charts (I do believe any intermediate term oscillator will do if you are intimate with it) Will use the macd here because almost everyone can interpret it. Stack the 25 tick over the 10 tick, place the 1 minute opposite with L2 & TOS. Using CIEN from 6/22/01 as an example locate the following time; 0942 - the 1 minute chart is in an uptrend, Cien has rallied back after having closed approx. 1/2 of the morning gap. The 25 tick chart shows an advancing "slow" line with the "faster" line falling back into it, this creates a pocket of resting momentum. The faster the timeframe under observation the less rest you will see coming back to life, if it is to do so. The 10 tick chart's macd has not traced below zero, instead exhibits strength, consider a long here 30.99 - 40.05 This offered a little less than .40 cents before the 10 tick macd flirted with the zero line. Looking throughout the day for "resting momentum" AKA pullbacks on the 1 minute and 25 tick chart you can see a few more opportunities for entries on the 10 tick chart. In a smaller nutshell: determine lager timeframe direction/locate pockets of resting momentum technically/trade in direction of larger time frame/ I should note that I chose CIEN for an example because I was in and out of it and it is a beautiful example. Also you probably will not have good luck with smaller volume stocks and fast framed tick charts, especially at lunch. And I would like to close by saying I am not an expert daytrading, I am learning. Swing trading is my forte, I decided to share with you because I had no one sharing and showing me when I wanted to learn. I realize there are many ways to do this. I hope this helps. -Hoyler
Thanks Hoyler. You are one of the first people to give me a precise example instead of a general advice on trading. I understand that there is a multitude of ways to trade and it takes more than a month to figure out your own way of winning consistently. All I am trying to do is figure out what things are working for other people that have been doing it longer than I have. Thanks for all the input, Iraf
If you have been trading for a month and losing your shirt, don't feel bad, you are not alone. Up until last week, I have made less than people working at fast food places and I am pretty sure there are some people at my firm who would like to trade places with me. This is the toughest market environment in a long, long time . . . so cheer up, if you are getting no where but not getting blown out, it is already a victory! I trade NYSE and I do things from a top->down approach. I track about 130 stocks across 16 sectors (everything from IUX to OSX) and part of my research is to keep finding stocks that follow index movements, with good volume and intraday range. Maintaining a high quality watch list is a MUST if you trade more than a handful stocks. Every morning, I do news research from http://www.briefing.com (at least until our team finally get the long promised Bloomberg terminal), it is a very "brief" site, you get the main events and little garbage. News is a huge factor in what to expect, upgrades/downgrades/earnings, very very important. I look through the dailys, although I do not pick out specific plays based on dailys, it is helpful to know the overall trend. In day trading, you are looking for something that happens TODAY, so shooting stars and hammers are much more effective than say, a potential triangle breakout. Lately, I have been looking at http://www.teachtrade.com, with their morning S&P futures support/resistance points, it is kind of helpful to know . . . sometimes. When the market starts, I watch the index charts on my screen (currently I have 3 monitors and I track 7 of them, when I get my fourth one, I will be able to watch all of them). The key to my game is to identify serious sector moves early and GET THE EASY MONEY. If SOX is choppy, I don't have to trade it, I go for something else. On NYSE, stocks don't open all at once, if I am trading say CEX, and DD is up 1.5 point on the day, even before the index opens I will be looking at the list of chemicals for stocks that open unchanged. Yes, ultimately futures drive everything, so if the futures is falling like a rock I am not going to long non-defensive sectors. The entire basis of a top-down approach is I follow futures->sectors->stocks. In other word, I don't look at a stock's intraday chart until I see some movement on its sector index. I use 5 minute charts, 10/20 EMA (as more or less a "ruler", not entry/exit determinations), and tape. Over time, I expect to get stronger and stronger feelings for those sectors (for example, a 2 point move on OSX is a HUGE move, and nothing more than a tiny wiggle on SOX), how the stocks move with the indexes, and tier relationship. For example, when the Fed. does a surprise rate cut, I should not even bother to look at GS, MER, MWD, LEH etc, I should pop in market orders for AGE, LM etc . . . When the market first opens I want to take one leader then as soon as I am in the money I want at least one tier 2. Pros: Every day, there will be some sector that trends very smoothly, and this means a VERY VERY easy fight. Nothing like going long in MMC and watch the IUX index going straight up, it is almost guaranteed money. This approach allows you to find easy money everyday. It also opens the door for powerful techniques such as pyramiding (build into winning positions when a BID shows up) and basket trading (see that SOX move? buy 3 SOX stocks!). Back in March, on a busy day I can comfortably handle 4-10 positions at a time, with hard stops for emergency of course. I feel I am diversified across various sectors that has nothing to do with each other, which reduces risk. Cons: I trade too many stocks, hence I do not become very intimate with ANY specialist. Although my tape reading skills improved dramatically since the summer started, my go-to stocks are weak compared to other traders because of my shotgun approach. For example, my best stocks are two energy stocks, HP and EPG, I know how they trade, how much they can move, but I do not know specialist habits, nor I trade them on a daily basis. Also, sometimes, like last Friday, you can suffer from "too many opportunities" on the table and become disoriented, end up taking too few positions, see my trading journal on this board for details. Although I expect over time this effect should be minimal. Whatever you do, you must find something that fits your personality profile. A very popular member on this board, praetorian2 looks for stocks that got completely hammered and bottomfishes when volume peaks, I watch him every day and I am completely amazed at how he mastered this particular strategy, but most people (me included) would feel intimidated to play the way he does. Regardless, having a quality watch list is a MUST, I would recommend slower stocks (TIER 2's) if you are a newbie, CIEN/JNPR's of Nasdaq and MU/MER's of NYSE are typically too tough if you are new. Good luck.