What is your trading style?

If I were to sum up my trading style with one word  it would have to be “opportunistic”.

I’m a day trader first a foremost but I don’t limit myself to only that. I do swing trade and pull an options trade here and there as well.

With that said however, my bread and butter type of trading revolves around buying strong stocks near support on the 5 minute chart. The support can be the 5MA, 20MA, 50MA or some other point of interest like a breakout, etc. Also, I use the daily chart to gauge support/resistance areas as well.

I try to not fight the intraday trend on a position but that’s not always case. Sometimes there is an area of interest on the daily chart that will trump the intraday trend, if only for a quick bounce.

Why don’t you have comments?

This is something I’ve heard a few times before because it surprises some people that I run a blog without comments. The reasons for this are as follows:

1. My favorite blog, and the first one I ever started reading, is The Kirk Report. Charles doesn’t have comments enabled so I never was trained to feel like comments were needed to make for a good blog.
2. I prefer people email me their comments so I can address them personally instead of getting lost in the shuffle.
3. Open comments can lead to spammers or hating/arguments/negativity that will clutter up the pages with nonsense. I prefer to keep things clean and positive.
4. I don’t like the aesthetics of having comments on the site. I guess that’s an entirely personal thing.

Also, when I go read a blog I read it because of the writer and not for the comments. In fact, I hardly ever check comments on the blogs I read.

How long have you been trading?

A little over 2 and a half years. I started learning in the summer of 2005 and have been hooked ever since.

I’ve taken a few months off after blowups here and there.

The first year was spent trying out different methods, instruments and just learning about the movements.

Year two was spent getting blown up after thinking I had things mastered. The second year was a crucial to experience and I believe it was a make or break year as far as if I was going to continue to pursue trading. It was filled with so many ups and downs. I learned that if I were to be succesful I would need to try to manage risk and emotions as best as I can.  This caused me to trade with a smaller account, not gamble on earnings, take out profits and really realize that there is no limit to how much a stock can drop or go up during the course of a day or  week.

The biggest thing however, that finally hit home is to not fight the trend. If I do so now, I’m much better at realizing that I’m fighting it and there has to be a technical reason for it rather than “I think the price is too low/high”. The “I think the price is too low/high” thought process is totally irrelevant and doesn’t hold any weight.

I still have a long ways to go and there are days where I disgust myself but I can see the progress I’ve been making and feel I’m on the right track.

What makes for a good trader in your eyes?

I believe there are three things that are essential  to have any shot at this:

1. Experience. You need to follow and trade the market on a day to day basis for quite a while to get comfortable with it. Experiencing different scenarios and seeing them play out in front of your eyes definitely lends a hand to becoming more confident with your trading.

The following quote sums up what I think about experience:

Experience teaches you to recognize a mistake when you’ve made it again.

2) Understanding Oneself. So much of trading is psychological. You need to know your strengths and weaknesses in order to create a system/environment that brings out the best opportunity for you to be successful.

For example, When I was trading on a platform that had a “one click order” feature, I noticed that I had a problem in that I sometimes found myself chasing big spikes or buying stocks on impulse. Some days I would literally make 50 trades.

What I did to keep that problem in check is I switched to a two page web-based entry form. This helped enormously as it cut down on my impulse purchases because it takes around 10 seconds to put in an order. You would not believe what a difference those extra seconds make in making you realize you’re about to do something stupid.

Knowing yourself and finding ways to get around your problem areas is critical.

3) Patience. This is something I struggle with quite a bit. You need to be patient and let trades come to you instead of chasing them. The market will give you opportunities every day, it’s up to you to pick the best ones. You have the advantage because you’re never forced to put on a trade, you can pick and choose. Many times traders like myself forget this.

How do you pick what stocks to trade?

I have around 50 stocks on my watch list that I follow and I don’t trade names that aren’t on that list. Every now and than I add or remove a stock based on a few factors.

The list pretty much entirely consists of stocks priced at $60 or higher. In fact if you look at my trades the majority of them are in stocks priced at over $100. I find that this price range works the best for me.

Another big factor in choosing which stocks make the cut is the liquidity. Even though I only trade 100-300 shares, I like stocks that are liquid and have consistent movement. To achieve this I look for stocks that trade at least 1,000,000 shares on an average day. However, most of the ones on my list trade much more than that.

I hope you guys enjoyed this Q & A session. Get your questions in for the next one by using the contact form.