This will be my journal on daytrading the US Equity markets (NYSE and Nasdaq).
A Brief background.
I have been involved in daytrading equities for a number of years (6 years or so).
I have never traded "for a living" > by which I mean that it has never been my sole source of income. Over the years I have been mostly employed in the IT software sector, development, on-call support etc. The associated flexible working and 'working from home' in combination with UK base (so NYSE open is 14:30pm UK time) has allowed me to daytrade alongside a 'normal' job when there is no impact.
My Trading Style and its evolution.
My trading style has evolved over the years (and still is) : here is a brief synopsis.
Started as a 'gap trader' : i.e. trading stocks which had gapped and using technical charts to trade candle patterns. This was going well for a couple of years but then the larger smooth moves seemed to get harder and harder to grasp.
I slowly came to the conclusion that trading solely from candle patterns was not the whole story. I started looking into company fundamentals, earnings news etc.
I then looked into what else drives the price: the big players, the order-flow (tape reading). Along the way I became a member of tradingRaw and also more recently Jigsaw trading both of which help me with tape reading.
My current Trading Style.
I have taken bits of experience over the years from different sources and combined them into the way I trade currently:
I still use charts, but I no longer use candle patterns to trade. Instead I am more interested in areas of trading: i.e. the open price, prev days high/low, current days high/low.
I day-trade stocks which are in the 'news': typically this means company reported earnings.
I view how these stocks are behaving at my areas of interest.
I view how these stocks are behaving relative to the market in general.
I view the order flow on the stocks before placing a trade.
It is a discretionary method. so it's not like everything must be in sync to make a trade. E.g. Sometimes I take a trade just based on tape (e..g strong absorption) or the order-flow is just giving me a feeling that it is weak or strong. E.g. Sometimes I take a trade based on chart and relative strength of the stock.
Exits are also discretionary, but typically I look for 50c and 1 point exits. Sometimes I leave some on for a larger gain. Overall the 1 point moves and larger moves are what keep the P/L on right side as my win rate is in the region 55-60%.
Stops are typically based on the area of interest : So if for example I am taking a trade off the open price, then my stop would kick in if the price goes beyond the open against me. I don't always hold for the full stop, for example if the tape is indicating a big buyer or seller against me then I will look to get out earlier.
Instruments >> NYSE and Nasdaq Stocks
Broker >> Interactive Brokers
Chart Timeframe >> 1 min (just price and 20 ema)
Chart Software >> NinjaTrader with Kinetic datafeed OrderFlow Software >> Jigsaw Tools (summary tape and recon tape)
Stock Selection >> use Briefing.com, FinViz, RTT news
Stock Filter >> Price between $15 and $100 > 10day avg volume > 750k > daily ATR over 50c > ignore large gappers (over 6-7%)
During the height of earnings season ; the stocks with news is huge. So you need some way of limiting what to watch. Typically I use the ones with best volume and also stocks which I have traded before and which gave decent smooth moves. Also I keep some stocks which are behaving opposite to the market.
Usually I try to aim for a watchlist of around 10 to 15 stocks.
I will endeavor to post on all days which I trade.
Last edited by jitasb; January 14th, 2015 at 08:12 PM.
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Traded JPM which was weak on the open and it had fallen below previous day's low.
It was failing to get above it's open price despite the market going up at the time. Also some heavy selling on the bid.
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Well I was putting in my order to exit at around 50c, which was also the previous day's high, so it seemed a resoable place to take partial profits. But the price drove up past that price before I submitted my order, so I just exited at market.
A better entry may have kept me in the trade for my other half position as that spike down got me out for breakeven on 2nd half.
Also I could have re-entered as the price remained above my previous entry once I was exited at breakeven. But adding to / new position on a stock which I have already traded is something I find quite difficult.
I don't have hard and fast rules on exits, but in general (as ball park) I am looking for 50c exit on partial and a $1 on partial.
If a 50c exit is past an important S/R level e.g prior day high for example, then I would exit before that (e.g. 40c or whatever). If my first exit would skew the R:R too much then I wouldn't take a trade. So risk 50c to make 50c is ok in my book, but risk 50c to make 20c : I wouldn't take a trade.
It also depends on the stock, so for example SLB is a big mover and I would look for more than $1 move if I had still been in it on 2nd partial.
Scale out on losing trade: yes I do sometimes if the tape is indicating strongly against me. E.G I am long and price is going against me > so say I am down 20c and my stop is 40c > then a big seller sits on the offer and absorbs all the buying. I would look to get out of some of my position. If the seller disappears then I can always get back in.
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