My Day Trading Strategy: - Trading Journals

Welcome Guest

Search | Active Topics | Members | Log In | Register

Forums » Trading » Trading Journals » My Day Trading Strategy:

10 pages: [1] 2 3 4 5 6 7 ... Last

My Day Trading Strategy:

Options

Previous Topic · Next Topic

zigzagman

Posted: Thursday, October 16, 2008 1:37:25 PM

Rank: Advanced Member

Joined: 8/14/2008
Posts: 315
Location: Memphis

These days with this super volatile market, I don't hold anything overnight because you never know if the Futures will be way up or down the next morning. The Volatility (Fear) Index (VIX) set an all time record high today at +81. which is more than twice as high as normal.

My favorite Day Trading stock at the moment is TSO and when the Dow Futures are up 100 points, it opens up fifty cents above the previous close. When the Futures are down 100 points, it opens up fifty cents below the prior close. If you hold 1000 shares overnight and the Futures are down the next morning, you've lost $500. overnight. That's something I won't put up with, because it's more like gambling than trading if you're hoping the Futures will be up when you're holding Long overnight.

I am back to Day Trading these days, which is a lot more stressful than Swing Trading but I'm enjoying it again for now. I always trade 1000 shares of any stock I trade, so that for every ten cents it goes up (or down if I'm shorting) I make $100.

If the trade goes against me, I will ALWAYS sell at ten cents down! I learned years ago that if you don't keep this rule faithfully every time, you can end up down over a thousand dollars in less than an hour. Capital preservation is the name of the game when Day Trading. You must preserve your money, and live to trade another day.

If I can make four or five hundred dollars each week doing this part one or two days a week part-time and being done by noon each day I trade, that's an annual income of nearly $25,000./year. When I was doing this full time years ago, I'd trade up to 25 times a week, and I would net over $100K/year.

If you follow along with this thread, you can learn a thing or two about Day Trading, which in principle is just like Swing Trading. The only difference is the time frame of the charts you use.

For Day Trading, I use the one minute chart and the five minute chart. My strategy for my entry and exit is based only on the five minute chart, but the one minute chart is very important too. For Swing Trading, I use the hourly, daily, and the weekly charts.

I use the same indicators for Swing Trading as I do for Day Trading. To enter going Long, the PPS must be at or below the lower Bollinger Band, the CCI must have fallen below the lower horizontal line and started to uptick, and Stochastics must be Oversold below the 20 line and starting to uptick with the fast line crossing up through the slow line.

(I have changed the title and the purpose of this thread. I was supposed to be a "diary" of all of my Day Trades, but I just don't have the time during a trading day to spend uploading charts and posting all of them. Now, it will be about how and why I enter and exit trades in a attempt to teach others that might be interested in the subject).

I did one daytrade just after the open today and cleared $280. in less than ten minutes.

I bailed out .20 too early because I couldn't believe it would keep running up so vertical without a pullback, and then wanted to short it at the top but chickened out. The Dow has been all over the place this morning, up 100+ and down 100 or so. I might buy again here at the bottom again with a short leash on it. If it breaks down, I'll short~~~

Day Trade #2 on TSO today took a bit longer and was kind of scary due to extreme volatility:

#1 netted $280. and this one netted $140. I guess I'm doing OK to make over $400./day in this crazy volatile market. As usual, I sold a bit early again, but this is the first day I've ever watched TSO and traded it. Live and learn. This one really MOVES! and gives you more than you'd expect, but it can also hand you a big loss very quickly too if you're not careful and abide by the ten cent rule I mentioned above. TSO is a great Day Trading candidate, becasue it can move 10% or more any given day, it runs tick-for-tick with the Dow one minute chart, it has huge average daily volume, and is inexpensive at around $10./share.

Here's the five minute chart and the explanation of why I did these two trades today according to the strategy you'll find in the thread: "My Favorite Trading Strategy" in this forum. My strategy relies mainly on the five minute chart, but I have many other charts in different time frames open for the stock I'm trading and the Index it's on. I also have Time and Sales and Level II windows open on my four monitor setup. These things aren't necessary when Swing Trading. Looking at daily and weekly charts and keeping up with the News and Reports is all it takes to Swing Trade.

I only Day Trade when my favorite Technical Indicators say to. I bought first thing this morning because it was at the lower Bollinger Band and totally oversold (STO)=(purple lines at the bottom), and the (CCI)=(three blue lines) crossed up through the -200 line, and the volume was big and mostly to the buy side. There are other things I look at on these charts, but I don't want to confuse you with them just yet.

The same setup happened at 11:30am and I did my second trade, and then again at 1:30pm which I stayed out of because I like to end my day at lunchtime and do other things the rest of the day.

(For some reason, the charts I post on this site have the colors all washed out of them. If you need some help identifying where the Technical Indicators are on these charts, send me a PM and I'll help you figure them out.)

Happy Trading,
zz

www.stock-market-lessons.com

netbacker

Posted: Thursday, October 16, 2008 2:43:34 PM

Rank: Advanced Member

Joined: 6/22/2008
Posts: 51
Location: Santa Clara

Thank you zigzagman for taking the time to post your trades. As stockman mentioned in the other thread, your posts are very educational. For the past few weeks, I have been sitting on the sidelines and reading yours and stockman's posts and learning.
Thank you once again.
The next obvious question is how do you find the stocks to daytrade in? Are there any finviz screeners that will spot the ones you are looking for?
-net

zigzagman

Posted: Thursday, October 16, 2008 3:15:56 PM

Rank: Advanced Member

Joined: 8/14/2008
Posts: 315
Location: Memphis

netbacker wrote:

netbacker,

You're Welcome!, and I'm glad you enjoy and are learning from stockman's and my posts here. For a long time it has been my pleasure to help educate traders to be more successful.

I usually Day Trade my favorite stocks that I've been watching for a long period of time and have been Swing Trading. That way, I already know them very well. Once in a while I find a new one like I did with TSO this week.

I watch the market channel CNBC quite a bit throughout the day, and I heard about TSO from the Fast Money segment that plays in the early evening. One of the panel members recommended it as a BUY, so I looked into it and found it met the requirements I have to be a good Day Trading candidate. First, it must have more than a million shares traded every day. The PPS must be above $10./share (TSO was up there when I first found it). Then it must have a large intraday range and be a fast mover, in that it can move nearly a dollar or so a day.

I have other means of finding good trading candidates. I've been a member of the Investors Hub message board for many years under different alias's. That's where I first learned how to read charts by reading other posters charts with annotations. Then I started my own board and gathered a good following by being right most of the time. I still am active at IHUB under the same alias I use here, and by reading my favorite boards gives me insight into what other members think are good stocks to trade.

I also use stockcharts.com as my primary charting service for annotating the charts I post here and on IHUB. They have a very simple stock screener page that I find very useful for finding good stocks too.

Sometimes I find a good stock by watching the ticker scroll by on CNBC, or by hearing a Quarterly Report live on that channel. If the market is up one day, and I hear of a stock that beat analyst expectations in it's Report, I'll go Long on it if it hasn't gapped up too much as soon as the news hits the wires.

This site is also a good place to see stocks with unusual activity, and the screener here is good, but I find it a bit complicated for my tastes.

I hopes this helps to answer your question. You should check out IHUB. Investors Hub has 135,091 members who have written 32,912,878 posts. This site is bent towards penny and sub-penny stocks, but there are a small percentage of us that only play the Big Board stocks.

Happy Trading,
zz

www.stock-market-lessons.com

wilfee@yahoo.com

Posted: Tuesday, October 21, 2008 1:52:09 AM

Rank: Advanced Member

Joined: 7/14/2008
Posts: 34
Location: California

Hello Ziggy....Love your Posts as always...how much capital in your opinion would be needed to make around 100K/yr. I was wondering what minimum amount need to be accumulated to be sufficient to generate the kind of profits/losses you refer to....Adam

Simple Living High Thinking

zigzagman

Posted: Thursday, October 23, 2008 6:47:41 PM

Rank: Advanced Member

Joined: 8/14/2008
Posts: 315
Location: Memphis

wilfee@yahoo.com wrote:

Adam,

To open a Day Trading account with any of the online brokers, you must deposit at least $25K in CASH. And the account must always remain above the $25K limit, or you lose your ability to Day Trade an unlimited number of times per day. You also want to apply for Margin on the account, which will give you 4X the buying power of your cash balance.

I'd recommend opening an account with at least $30K in cash (which will give you $120K in Day Trading Buying Power). That's so you have a $5K buffer zone to absorb any initial losses without breaking below the $25K minimum cash limit.

Day Trading isn't for everyone, and only 10% of all the people that try it end up being successful. The ones that are successful are totally analytical and totally unemotional while in a trade. Reading charts has nothing to do with emotions and when you let your emotions get in the way of your decision making process, that is when you'll end up in trouble.

The reason most people fail is they can't take a loss without it effecting them emotionally. So they can't sell at $100. down like you're supposed to, and a few hours later it is a loss of $1000. or more.

I have bad trades occasionally and take the $100. loss without fail. I look at my bad trades as 'business expenses' and don't get emotional about them. I learn from what I did wrong, and try not to repeat the same mistake again.

To be successful, you must be well versed in chart patterns, volume studies, and know a few technical indicators very, very well. You must also have a good strategy for capital preservation so that you 'live to trade another day'.

If you're interested in learning more, send me a Private Message, and I'll give you lots of other information like which online brokers are best, how to set up your trading platform and the charts, Time and Sales, and Level 2 windows.

I can also coach you on how to add more monitors to your computer with additional RAM to handle the extra memory load. I have four monitors hooked up to my computer, and I couldn't be a successful Day Trader without them.

Happy Trading,
zz

www.stock-market-lessons.com

stockman

Posted: Saturday, November 01, 2008 12:54:47 PM

Rank: Advanced Member

Joined: 6/15/2008
Posts: 240

ZZ:

I was watching airline stocks on Friday, but didn't notice them until they were up too much for the day. I had bought in the past at 1000 a clip, but the volatility of fuel in the past caused problems. Is there a stock or group of stocks you are watching for the first week of November? Seems like a good time if we go into a bear rally because so many stock prices are beat down to lower levels and would jump up in price. The same would be true of bear etf's that went down last week and if we went into a rapid decline market would have big percentage gains in a day if the market moved steeply. Since we are at the top of the trading channel, any opinion if we will breech 9500 or go down from here? I don't expect you to have a crystal ball, I just wanted to know what your gut tells you. Mine has no idea except to think we will trade in a range until after the election and than a rally because a big unknown will be resolved.

zigzagman

Posted: Saturday, November 01, 2008 10:07:58 PM

Rank: Advanced Member

Joined: 8/14/2008
Posts: 315
Location: Memphis

stockman,

I posted a reply to this under my thread "Chart Analysis of the DOW:" found here:

http://www.finviz.com/forum/yaf_postst248p3_Chart-Analysis-of-the-DOW.aspx

zz

www.stock-market-lessons.com

racer

Posted: Sunday, November 02, 2008 2:28:23 AM

Rank: Newbie

Joined: 11/2/2008
Posts: 7
Location: SC

Zigzag,
I too daytrade and you got my attention when you mentioned that you use a $100 stop as I do. However, real curious, haven't you found that extremely challenging considering the volatility lately? I've been forced to seriously adjust my position sizing. Even the Q's that not that long ago had a .45 ATR can now move .50 in 5 min.
I noticed that you said you primarily use 5min charts but then you posted a 1min also. Would assume that using a .10 stop that you use it primarily for your actual entry and the 5min more for the trend.
If you could, what few others are your favorite DT stocks these days.

zigzagman

Posted: Sunday, November 02, 2008 2:30:04 PM

Rank: Advanced Member

Joined: 8/14/2008
Posts: 315
Location: Memphis

racer wrote:

Hi racer, and Welcome! to Finviz.com...

The most important part of my entry strategy is to enter when the PPS gets to the bottom Bollinger Band on the five minute chart. The Stochastics must have reached totally oversold near zero, and the CCI has fallen below the lower horizontal line and they are both just starting to uptick.

I also use the one minute chart of the stock I'm trading, and one for the exchange it's listed on. I only pick stocks that mirror the movements of the Dow or Nasdaq nearly tick-for-tick most of the time. You have to recognize if it's doing this or not on a moment-to-moment basis. If a particular stock isn't mirroring, I'll find one that is. I especially like ones that follow the movements of the exchange, instead of ones that move first and then the exchange moves after.

Here is an example of what I'm talking about when a stock 'mirrors' the movements of the exchange it's traded on:

When the five minute chart is showing a perfect entry by my strategy, the one minute chart will also be showing the same characteristics listed above, except the CCI and Stochastics will start to turn up first. That's when I enter and I use the one minute chart to get my entry within ten but no more than fifteen cents off the very bottom. Then I look for a negative chart pattern to form on the one minute chart, like a double top or a decending triangle to show me that it will most likely go down instead of up. If the trade fails to yield up, my exit point is a penny below the most recent low without fail.

I don't mind that every trade doesn't go the way I want it to. That's just a fact of life. If you can win 65-75% of your trades, your losses will be much less than your wins because the wins can net you hundreds of dollars, and occasionally a thousand or more. While your losses will always only be $100. With 1000 shares, if a stock goes up from the lower BBand to the upper one, the ones I play can easily move a dollar or more. That nets you $1000. in an hour or so.

My favorite stock to day trade must have the following characteristics:

* They must be traded on the NYSE, S&P500, or NASDAQ exchanges. I will never trade a stock that is listed on the Over the Counter Bulletin Board (OTC)or Pink Sheet (PK) exchanges because they require you to use Limit Orders to enter and exit trades. When I want in, I want in NOW with a Market Order. And the same holds true for when I want out.

* They must mirror the movements of the exchange they are traded on. (see the charts above)

* They must trade at least a million shares a day, and most of my favorites trade a minimum of five million shares a day or more on average.

* The PPS is usually at least ten dollars per share, and no more than fifty dollars per share because I must always be able to afford a minimum of 1000 shares on every trade. When I am really sure a trade will work because the stock is just beginning a runaway train move, I'll jump in with 2000 shares, but that cuts my exit point to only five cents below my entry price before I must exit with a $100. loss.

* They must be able to move in a range of at least fifty cents to a dollar from the lower BBand to the upper one on the five minute chart if I'm going Long, or from the upper BBand to the lower if I'm going Short.

My favorite stocks to Day Trade these days are:

TSO YUM AKAM and MS

I'm always looking for new stocks to Day Trade. Which ones do you like the best now?

Anyway, I hope you understand a bit more about what I'm trying to show here. Good Luck!, and...

Happy Trading,
zz

www.stock-market-lessons.com

racer

Posted: Sunday, November 02, 2008 4:22:17 PM

Rank: Newbie

Joined: 11/2/2008
Posts: 7
Location: SC

ZZ,
Thank you for an extensive reply and for the welcome. Site has come a long way since I first ran across months ago. It's always nice to see other techniques that are successful. I like what you're doing though I tend to be a little more of an intraday trend follower I do a fair amount of scalping. As you, only trade high volume stocks but perhaps a few more ETFs than you. Q's, SSO, XLE UYM lately as well as perhaps 30-40 stocks regularly. AAPL, RIMM, PBR, MSFT, TSO and VLO, JRCC, X, etc. I like your idea of just trading till lunch and quitting for the day as you well know sometimes you tend to give back what you have received in the am. LOL. I usually wait till about 9:45 to start trading unless I'm closing out pre-open positions. Since I also trade futures and currency, usually too busy right at open, though the futures tend to position trade for bigger moves there. Scalping them doesn't work for me at all.

Though I don't use the BB extensively, one of my favorite setups is when you get a nice wick against them and especially when it coincides with an additional support point such as a pivot or longer MA. See RIMM 5min friday am perfect example. I use the RSI and or williams%R more than the CCI and due to currency background have been using macd more and more in my stock trading past year to stay in a trade.

I think for the newer traders here, of all the tidbits you've imparted since reading over your posts, is your being an absolute fanatic on keeping stops. I run a small trading room and the the most important thing I constantly emphasize to be a successful trader is discipline. There are hundreds of successful techniques, systems, etc. out there but none of them work w/o proper discipline. Lack of, is the bane of all traders,myself included occasionally, lol, whatever time frame, so for that thanks for the emphasis.

Look forward to further posts.

Racer

Users browsing this topic

Guest

10 pages: [1] 2 3 4 5 6 7 ... Last

Forums » Trading » Trading Journals » My Day Trading Strategy:

Forum Jump

You cannot post new topics in this forum.
You cannot reply to topics in this forum.
You cannot delete your posts in this forum.
You cannot edit your posts in this forum.
You cannot create polls in this forum.
You cannot vote in polls in this forum.

Main Forum RSS :

YAFPro Theme Created by Jaben Cargman (Tiny Gecko)
Powered by Yet Another Forum.net version 1.9.1.8 (NET v2.0) - 3/29/2008
Copyright © 2003-2008 Yet Another Forum.net. All rights reserved.