1. Financial Instrument: As a trader, you should understand the financial instrument that your trading whether it be stocks, options, futures or cfd’s. Each instrument has it’s own characteristics and personalities. Find which one is similar to yours and concentrate on that financial instrument. Best way to find out which one suits you is try demo accounts for those instruments, with the number of brokerages out there, you would be able to find a brokerage to have demo accounts for trial.

2. Capital: Once you determine the financial instrument you would like to trade , determine how much capital you would need. Remember, risk only what your willing to lose. If your a newbie, you might have a beginner’s luck in one-two trades i.e. why having sufficient capital to start your trading is utmost important.

3. Broker: Whether your profitable or not, you will always have to pay commissions for whichever financial instrument your trading. Find out which broker can provide you the following:

• Low commissions
• Stable and reliable platform
• leverage
• excellent customer service
• easy to deposit and withdraw funds
• trading room with trading mentors.

If you trade stocks then you reach out to me for which broker I use.

4. Trading Mentor: This is going to be one of the trickiest part, with some many traders out there and so many trading rooms. It has become confusing at times to find out which mentor is good for you. But once again, most mentor out there who run a trading room, they would have free trials to their room, so try to get access to it and spend atleast a month at a bare minimum and understand his strategy or personality and see if it resonates with you. @stocktwits has a lot of traders in there, you can see the posts of those traders and see if they fit your personality.

5. Trading Plan:  Trading is like a business, if you don’t have a plan of action your bound to fail. It’s only a matter of time, once you determined your trading mentor.  Ask the mentor to develop trading plan for you and help you with understanding risk management.

6. Trade Small Sizes: As a new trader when you start and have done all above 5, you will feel your pretty much invincible. But let me tell you straight up, if you keep hitting big sizes as a newbie, your account will shrink faster than you can hit those keys on your keyboard and you won’t even know what happened.

Hope all of this helps.

dchsn6

$STZ one of the strongest names from yesterday  and was on top of my list. My entry was PERFECT which was called out in our free online trading room but trade management was a bit all over the place. Even though the rest of the guys made some decent cash on it.  For me if I had to rank it, I would give it 2/10.

As can be seen from the chart I got the right price for entry, I even scaled out some of on the 1st piece near the .20s, for the rest I should have moved my stops to breakeven and let it breathe and see what is going to happen, instead I closed out on that pullback near .07-.08 region.  Even though it still came out to be high reward to risk- trade because of my entry price, the trade could have been even better. As traders, there are times like these which will happen. That’s why we LIVE AND LEARN and Survive to trade another day.

dchsn6

www.dchsn6.com

Base Breaks are my favorite patterns, you gotta learn it and we play it in the online live trading chatroom all day. Yes, the HITS keep coming. Another gap down day in the markets $SPY $QQQ. With initial momentum to the downside, I scanned around for weak names across the board and came up with a few names but $LXK is the name which trigerred and yours truly, jumped on it as usual.

$LXK was an easy 5R reward to risk trade, do this a couple of times in the day in a week and you should be good. This is what we do in our live daily trading chatroom. Come check us out.

My previous Market Calls

dchsn6

www.dchsn6.com

I have been eyeing to go long S&P 500 $SPY, NASADQ $QQQ and Russell 2000 $IWM  since June 1, 2012 when we had the false breakdown on volume which had no followthru the next day.

$SPY $QQQ $IWM all trended up till June 19, 2012 before we had that big down move which was called out in my post ‘ WHY I am long $TZA’. We had a sever down move on June 21, 2012 and I was watching how the market was gonna react on June 22, 2012. Once again we had very little follow thru to the downside.

Between June 26th and Jul 3rd we once again trended up nicely, I blogged about ‘ Is it time to buy the DIPS’ on July 4, 2012 before we had a down move today on July 10, 2012.

AT 3:50pm I tweeted out to go long  $SPY and also mentioned in  trading room

Follow me on twitter @dchsn6 for my tweets.

My Thesis why I mentioned long $SPY $QQQ $IWM, as traders we look for opportunities which favors the reward to risk.

As can be seen from the chart ,

1.  Tested trendline B which is the upward slopping trendline.

2. Tested Trendline A which is the downward sloping trendline.

3. 134 on $SPY is also the region between 38% and 50% retracements on fibonaccis.

4. We did the gap fill created on June 29th gap up.

5. We have the volume accumulation signs in $SPY

6. 20EMA and 50SMA as support on daily.

The above are the 6 points why I mentioned to go long $SPY $QQQ $IWM.

My thesis is nullified if $SPY goes below 130. But once again as a trader we look for risk-reward with 4point downside, I am looking for 1st tgt atleast to 142 on $SPY.

My previous Market Calls

dchsn6

www.dchsn6.com

It’s viable for most countries across the world who are in debt

http://www.youtube.com/watch?v=Bx5Sc3vWefE&feature=player_embedded#!

‘I need a million dollars to make a living from day trading‘ those are the exact words of my friends when I ask them why don’t they think about daytrading, if they hate their job so much. My response to the statment of my friends is ‘ Buddy, we are in 2012 not in 1912. We live in a period where LEVERAGE is the key and THE utmost important thing. It’s how you use it to your benefit’.

Let me elaborate on my statement.  In this age where there are proprietary firms (firms which provide you capital or requires you to deposit a minimum amount and give you 10:1 to 20:1 or even 30:1 leverage) you don’t really need a lot of money to day trade and guess what they even have cheaper commissions and have direct access to exchanges to route your orders. In full disclosure, I have an account with a proprietary firm and am more than happy with them since I need to deposit only a small seed capital and can use my skills to make that seed into a tree.

Let me give you a realistic example, say you have $5,000 and you have developed your trading skills and are now ready to make some serious money not BABY money. What do you do?

You go and do your research and find the best firm which can give you the best benefits for you buck. How do I define best firm.

1. Reputable firm which has been around for more than 10 years

2. Competitive Commissions

3. Manageable Leverage

4. Good Trading Platform

5. Great back office to provide you instant response on technical or account issues.

Once you have decided which firm you want. You sit down and develop your trading plan. I call it a business plan. So you have $5K and with a 10:1 leverage, you can get $50K buying power for daytrading. Now with $50K buying power you only have to trade 500-1000 shares  (stocks below $100) everyday and look to hit 50 cent or $1 per share profit. Now once again I am not being greedy over here. Remember, I am treating trading as a business. So, in my plan of action I am looking to make anywhere between $250-$1000 per day., with 50 weeks and 250 days available for trading ( I have ballparked the number, it might be a few days more or less depending on the year). We are looking at an income of $62,500-$250,000 per year. Now that is a salary which only a fucking lawyer in a top firm or a top notch accountant or a dentist or any guy who has gone through the grind or in most corporate culture/white collar jobs have fucked all his friends and family over to have reached there or a nerd ..u shud hve got what I mean by now…if not daytrading is not for you.

Now the biggest question you gotta ask yourself is am I capable of making 50 cent or $1 per share profit on every trading day. Here, is where skills development comes into place. For this above business plan to work you need to have worked on a strategy which  will allows you to make that amount of profit, it might take you 1 yr, 2yr, 3yrs or even 10yr or even more. But once you get it, your set.

Follow me on twitter @dchsn6

Facebook:  https://www.facebook.com/Dchsn6

Blog: http://www.dchsn6.wordpress.com

dchsn6

I have been asked this question many a times why I don’t trade the open as easy and quick money is always   made there. My response has always been it’s not within my gameplan.  Which hours to put on trades is one of major criterias of my trading and has given me high probability trades with minimum risk.

I break it down into two

1. For morning session 10:00-11:30am

2.  For afternoon session 1pm- 2:30 pm.

I have mentioned 6 reasons in total for both morning and afternoon session.

The thesis behind morning session:

1.By 10:00 am whichever stock that you want to go long or short would have shown you the trend by then.

2. The type of candles that have been laid down you can evaluate it easily. If before 10 am , the candle laid out were whippy and choppy with big tails up or down chances of you finding a good entry point in such a stock would be low.

3. Spreads are tighter than the early morning rush, hence easier to define risk and if the trade reverses against you ,you can smack it out easily, rather than an early morning trade say at 9:35 where you put on a trade and if reverses on you the stocks moves so fast and spready that it’s highly likely you won’t know what hit you, you would be like a deer in front of a car (it has happened to me before many a times but not anymore).

4.  Even though you might have made watchlist from yesterday not all of them would have triggered or moved the way you would have thought so.  Hence between 9:30am- 10:0am you can build a solid watchlist based on the market direction on that particular day.

The thesis behind afternoon session:

1. Whichever stock that has trended in the morning,  it will usually give you another opportunity unless the stock has already maxed out its daily range or its extended on other timeframes.

2. Spreads are controllable and risks can be more defined.

Facebook Page:  https://www.facebook.com/Dchsn6

Follow me on twitter @dchsn6

blog: www.dchsn6.wordpress.com

dchsn6

After scanning through tons of charts, I have shortlisted some of the  stocks I will be watching for May 7, 2012.

For short

$ALXN

$HUM

$ESRX

$JPM

$RIG

$MON

Long

$EAT

$SWI

$VECO

$VHC

$LULU can be traded either way long or short, depends on how the price reacts to market tomorrow.

If you like to see how I will be trading these names or other names tomorrow.

Follow me on twitter @dchsn6

blog: www.dchsn6.wordpress.com

dchsn6

Nasdaq‘s are looking to go lower in my opinion. It can be easily seen from the chart why I am saying so.

1. At point 1 from March 21-March 28, we were already seeing some deteriorating signs, with a increase in price but no volume, which in simple terms lesser people buying at higher prices. On the flip side the other 3 arrows in the chart show you some massive volume on days we are down. What it tells us is big institution want to get out on every bounce possible and sell it to so called bag holders  who call this buying the dip.

2. At point 2, from April 25-May 2, we saw what we call in technical terms as a dead cat bounce, once again look at the volume. It keeps on decreasing , which usually means retail investors trying to get in at those prices. On May 3 and  May 4, we get an epic flush. Take that bag holders once again.

For a healthy market, we always want the small cap index Russel 2000 leading the way, which means we want them to go higher if it really is a bull market, reason being people are more confident on speculative name s and are willing to take on more risk. However, the current state of Russell 2000 looks shady at its best.

My advice would be, this is the time to raise cash, if your an investor. Shorting stocks is the hardest thing to do, as it requires individuals with much more knowledge and sophistication. If your a day trader, then your dreams are gonna come true in a few weeks with increase in volatility imo. For retail traders, I would say stay out or be ready to get chopped out.

Check out my previous post about Goldman Sach’s Generation top http://ibankcoin.com/dchsn6/2012/04/10/goldman-sachs-generation-top/

Perfect song for this post

How Low can you go

Follow me on twitter @dchsn6

dchsn6

I played COST on the short side today in our trading room, made some decent gains.

entry: 81.54

stop: 81.61  …7 cent risk

Target: 81.17 …37  cent profit

Time in the trade: 12 mins

it was a 5:1 risk trade which I would have taken any time of the day.

Below is the charts of COST and QQQ, breakdown couldn’t have been timed better :).  my entry and exits are from my broker’s trading platform.

I managed to tweet the entry and exit out too. Pretty painless trade.

Follow me on twitter @dchsn6

dchsn6