The Complete Idiot's Guide to Daytrading Like a Pro, 2E,9781592574322

The Complete Idiot's Guide to Daytrading Like a Pro, 2E

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Edition: 2nd
ISBN13: 9781592574322
ISBN10: 1592574327
Format: Paperback
Pub. Date: 2005-11-01
Publisher(s): DK Publishing, Inc.
List Price: $19.95

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Summary

You're no idiot, of course. You know that day trading is the fast way to make really big bucks, but you're not sure you're ready for such high stakes and big risks.

Author Biography

Robin Craven and Lynn Johnson Golabowski together have over 45 years of experience in the hotel sales and meeting planning industries. Both are past presidents of the Wisconsin chapter of Meeting Professionals International, as well as partners in their own meeting planning company.
D-'Etta Waldoch, CMP, has 26 years of experience in meeting planning. She is director of International Programs for a transplant research institute and president of an independent meeting planning firm.

Table of Contents

Part 1: A Day at a Time
1(66)
What Is Day Trading?
3(12)
Starting at the Beginning: A Few Definitions
4(1)
Definition: Trading
4(1)
Definition: Day Trading
4(1)
Definition: Active Trading
5(1)
What a Day Trader Really Does
5(2)
At Work in the Open Marketplace
6(1)
The Role of the Day Trader
7(1)
What Makes It All Possible
7(1)
Data Becomes Information
7(1)
Direct Access
8(1)
Is Day Trading a Good Thing?
8(2)
Is Day Trading Gambling?
8(1)
The Role of Traders
9(1)
More About Liquidity
9(1)
Who Wins and Why?
9(1)
Become a Better Investor Through Trading
10(1)
Trading as Part of an Investing Strategy
10(1)
Segmenting an Active Portfolio
11(1)
To Trade or Not to Trade
11(4)
What You Should Already Know
12(1)
A Fair Warning
12(3)
Day Trading Makes a Comeback--Again
15(14)
The State of Trading Today
15(4)
By the Numbers
16(1)
A More Rigorous Endeavor
17(1)
Response: Evolved Traders
17(1)
Consolidated Platforms
18(1)
Hedge Fund Involvement
19(1)
A New Revolution, an Old Idea
19(4)
The Dark Ages
20(1)
Trading Stocks the Old-Fashioned Way
20(1)
The Technology Renaissance
21(1)
The Age of the Electronic Market
21(1)
The Rise of Personal Technology
22(1)
Faster Connections
22(1)
The Information Revolution
23(2)
Internet Trading
23(1)
High-Performance Trading Information
24(1)
New Rules, New Tools
25(4)
Rule Change: Commission Deregulation
25(1)
Tool Change: NYSE SuperDot
26(1)
Tool Change: SOES on NASDAQ
26(1)
Rule Change: Limit Order Protection Rule
27(1)
Rule Change: Decimal Trading
27(1)
Toward More Electronic Trading
28(1)
What It Takes to Be a Trader
29(16)
What It Takes to Be a Trader
30(2)
Time Commitment
30(1)
Skill and Experience
30(1)
Judgment
31(1)
Self-Confidence
31(1)
Self-Control
31(1)
Financial Control
31(1)
An Ability to Tolerate Risk
32(1)
An Ability to Concentrate
32(1)
Mental and Physical Stamina
32(1)
Trading Styles
32(1)
The Pure Dealer
33(1)
Short Term, High Intensity
33(1)
You Can Log Off After Hours
34(1)
Timing Is Everything
34(1)
The Momentum Trader
34(1)
Setting the Alarm
34(1)
Before and After Hours
35(1)
Avoiding Greed
35(1)
Safety Nets
35(1)
The Range Trader
35(1)
``Hands Off'' Trading
36(1)
Range Trading Challenges
36(1)
Pattern Trader
36(1)
Midnight Oil
37(1)
The Cubicle Trader
37(1)
How Much Can a Day Trader Make?
38(1)
The Right Stuff
38(3)
Initial Investments
41(4)
A Computer and a Connection
41(1)
Platform, Information, and Trading Costs
41(1)
Training Costs
42(1)
Initial Stake
43(2)
What Day Traders Trade
45(12)
What Makes It Good to Trade
45(3)
Liquidity
46(1)
Volume
47(1)
Movement
47(1)
Access to Information
47(1)
Easy Access to Trade
47(1)
Trading Stocks
48(1)
The Major Markets
48(1)
Besides NYSE and NASDAQ: Other Markets
48(1)
Options, Explained
49(3)
What Is an Equity Option?
50(1)
Option Prices
50(1)
A Transfer of Risk
50(1)
Equity Option Pricing
51(1)
At, In, or Out of the Money
51(1)
About Trading Options
52(2)
A Different Risk Profile
52(1)
Hedging and Risk Management
53(1)
Option Combinations
53(1)
Index Options
53(1)
Option Wrap-Up
54(1)
Trading Futures
54(2)
Commodity Futures
54(1)
Financial Futures
55(1)
About Trading Futures
55(1)
It Makes Sense to Start with Stocks
56(1)
Regulation and Taxes
57(10)
The Regulatory View
58(1)
The Securities and Exchange Commission (SEC)
58(1)
The (Former) Chairman's View
59(1)
The National Association of Securities Dealers (NASD)
59(3)
New ``Pattern'' Day Trader Margin Requirements
59(1)
Broker Disclosure
60(2)
Licensing?
62(1)
The Bottom Line for Traders
62(1)
Time Out for Taxes
62(5)
The Advantages of Trading as a Business
63(1)
How to Quality as a Trading Business
63(1)
Schedule C, Schedule D
64(1)
Mark-to-Market Election
65(2)
Part 2: A Trip to the Markets
67(52)
Trading Places: The NYSE
69(16)
A Star Is Born: A Brief History of the NYSE
70(2)
Prior to 2000
70(1)
Beyond 2000
71(1)
Who Gets Listed on the NYSE
72(1)
How the NYSE Works
73(1)
Setting the NYSE Stage
73(1)
The Big Apple Auction
73(1)
Who Has What Information
74(1)
The Role of the Specialist
74(4)
Creating Balance and Liquidity
75(1)
The Order Book
75(1)
The Reward System
76(1)
Specialist Firms
76(1)
Electronic Routing
77(1)
The Speed of NYSE Trading
77(1)
Other Exchange Floors
78(1)
Regional Exchanges
78(1)
ECNs
78(1)
The Trader's View of the NYSE
79(1)
Executing the Trade
80(2)
Back to the Order Book
80(1)
The Other Side of the Trade
81(1)
When the Specialist Takes the Other Side
81(1)
What Makes the Price Move
81(1)
Is the NYSE Trader-Friendly?
82(3)
Trading Places: The NASDAQ
85(14)
The NASDAQ
86(1)
A Dealer Market
86(1)
Enter the Computer
86(1)
What Trades on NASDAQ
87(1)
Market Makers
87(3)
What Do Market Makers Do?
88(1)
Viewing Market Maker Action
89(1)
A Dealer Market (Almost) Never Stops
89(1)
The Nuts and Bolts of NASDAQ
90(2)
The NASDAQ Quote System
90(1)
The Inside and Outside Market
91(1)
What Do Market Makers Quote?
92(1)
NASDAQ Trading Systems
92(1)
SuperMontage
93(1)
Execution Strategies
93(1)
TotalView
93(1)
SOES
93(2)
Why SOES?
94(1)
SOES rules
94(1)
ECN: A New Trading Network
95(2)
A Brief History of ECNs
95(1)
ECN Trading
95(1)
Why ECNs Are Popular
96(1)
Anatomy of a Trade
97(2)
Fixed Price, or Limit Order
97(2)
Trading Places: Commodities and Futures
99(20)
Why Trade Commodities and Futures?
100(1)
Leverage
100(1)
More Defined Information Space
100(1)
Tax Benefits
101(1)
What Is a ``Future''?
101(1)
Futures Exchanges
102(1)
Kinds of Futures
102(3)
Price Drivers
102(1)
Contract Size
103(1)
Minis
104(1)
Initial Margin, Margin Maintenance, and Leverage
104(1)
Liquidity and Volatility
104(1)
Who Trades Futures and Why?
105(1)
Quoting and Trading Futures
106(1)
A Futures Trading Window
107(1)
Futures Order Types
108(1)
Market Orders (MKT)
108(1)
Stop Orders
108(1)
Limit Orders
109(1)
Or Better Orders
109(1)
Fill or Kill
109(1)
Margin in Futures Trading
109(2)
Initial Margin
110(1)
Maintenance Margin
110(1)
Margin and Leverage: An E-Mini Example
110(1)
Margin and Leverage: Full Contract Example
111(1)
Common Trading Strategies
111(1)
What Day Traders Trade
111(1)
Assisted Trading
111(1)
Evaluating the Trade
112(2)
Time Horizon
112(1)
Choosing an Entry Point
113(1)
Playing an Established Trend
113(1)
Trend Reversals
113(1)
Trading Ranges
113(1)
Technical Analysis Tools
114(1)
The Commitment of Traders Report
114(1)
Using the COT Report
114(1)
Short Selling
115(1)
Spreading
115(1)
Trading Currencies
116(1)
Transaction Costs
116(1)
Spot and Futures Markets
116(1)
Currency Trading Platforms
117(1)
Futures Trading Pitfalls
117(2)
Less Platform Standardization
117(1)
Transparency
117(1)
Overleveraging
118(1)
Part 3: Tools of the Trade
119(76)
Staying Informed
121(16)
What Do We Mean By ``Information''?
122(1)
News
122(1)
Quotes
122(1)
Charts
122(1)
Analysis
123(1)
Selection Criteria
123(3)
Fee or Free
124(1)
Delivery
124(1)
Breadth and Depth
125(1)
Selectivity
125(1)
Single or Multichannel
126(1)
Data to Information
126(1)
Customization
126(1)
Information Sources by Price
126(1)
Free or Nearly Free
126(5)
Print Media
127(1)
TV/Radio Media
128(1)
Web Portals
128(2)
Online brokers
130(1)
$10--$25 Per Month
131(2)
Briefing.com
131(1)
Yahoo!Finance Real-Time Quotes
132(1)
Tradingmarkets.com
133(1)
Expensive: Advanced Information Platforms
133(2)
eSignal
134(1)
Very Expensive: Analysis Software
135(1)
Very Expensive: Specialized Day Trading Resources
135(2)
Buying and Selling
137(14)
More Than Just Buy and Sell
138(1)
Order Timing
138(1)
Special Conditions
138(1)
Order Pricing
139(6)
Market Orders
139(1)
Limit Orders
140(2)
Using Limit Orders
142(1)
Stop Orders
143(1)
Stop Limit Orders
144(1)
Canceling or Changing Orders
145(1)
Backing Out
145(1)
Change Orders
145(1)
Selling Short
146(2)
The Short-Selling Mechanism
146(1)
Short-Selling Rules
146(1)
Entering a Short Sale
147(1)
Short Sales Use Margin
147(1)
Short-Selling Risks
148(1)
Shorting as a Strategy
148(1)
After-Hours Trading
148(3)
Using Margin
151(10)
What Is Margin?
152(1)
Terms and Conditions
152(2)
Current Market Value
152(1)
Initial Margin Requirement
152(2)
Buying Power
154(1)
Excess Equity
154(1)
Minimum Maintenance Requirement
154(2)
Why Use Margin?
156(1)
What Does Margin Cost?
156(2)
Sample Margin Rates
157(1)
Calculating Margin Interest
157(1)
Tax Treatment of Margin Interest
157(1)
The Margin Call
158(1)
Resolving a Margin Call
158(1)
Should a Trader Use Margin?
159(2)
Online Brokers
161(14)
What Is an Online Broker?
162(1)
The ``Pros'' of Using Online Brokers
162(1)
The ``Cons'' of Using Online Brokers
163(1)
Online Broker Features
163(5)
Information
164(2)
Trading
166(2)
Active Trader Add-ons and Features
168(2)
What Is an Active Trader?
168(1)
Commission Discounts
168(1)
Streaming News and Quotes
169(1)
Dedicated Service and Support
169(1)
Software Tools
169(1)
Hybrid Platforms
170(1)
Choosing an Online Broker
171(4)
Features and Services
171(1)
Ease of Use
171(1)
Cost
172(1)
Minimum Trader Requirements
172(1)
Performance and Dependability
172(1)
Manual Backup
173(1)
Service and Support
173(1)
Migration Path to Advanced or Hybrid Platforms
173(2)
Advanced Trading Platforms
175(20)
What Makes Advanced Platforms ``Advanced''
176(1)
Advanced Platform Technology
177(1)
The Complete Picture
177(1)
Information Tools
178(9)
News
179(1)
Quotes
180(2)
Real-Time Charts
182(1)
Alerts
183(2)
Screening Tools
185(1)
Tickers
186(1)
Trading Tools
187(2)
Direct Access
187(1)
Order types
188(1)
Order Routing
188(1)
Conditional Ordering
189(1)
Choosing a Platform
189(3)
Market Access
189(1)
Information and Decision Support
190(1)
Trading and Execution Support
190(1)
Account Management
190(1)
Training and Learning
191(1)
Customer Service and Support
191(1)
Costs and Fees
191(1)
Trader Qualifications
192(1)
List of Providers
192(3)
Part 4: Reading Market Action
195(64)
Market Cycles and Behavior
197(14)
Market Timing
198(1)
The Market Almanac
198(2)
Yearly, Monthly, Weekly, Daily Cycles
198(1)
Seasonal Cycles
199(1)
Window Dressing
199(1)
The Triple Witch and Her Friends
200(1)
Investment Calendar
200(2)
Pure Economic Indicators
201(1)
Inflation and Interest Rates
201(1)
Business Activity Measures
201(1)
Company Reports
202(1)
Gauging Market Direction
202(2)
Market Indexes
203(1)
Stock Index Futures
203(1)
Market Internals
203(1)
Other Overnight Indicators
204(1)
Sentiment Indicators
204(1)
Volatility Index, or ``VIX''
204(1)
Put/Call Ratio
205(1)
Short Selling
205(1)
The Shape of the Day
205(1)
Bullish Shapes
206(1)
Bearish Shapes
206(1)
Sectors and Sector Performance
206(2)
Sector Indices
207(1)
Taking Sectors Apart
207(1)
Exchange Traded Funds
208(3)
Using the Level II Screen
211(14)
The Level II Concept: A Short Review
212(1)
At and Away from the Market
272
Time and Sales
212(1)
An Action Movie
212(1)
In Living Color
213(1)
By Way of Example
213(2)
A Nice Move Today
213(1)
The Inside Action
214(1)
Away from the Market
214(1)
Time and Sales
214(1)
Quote/Change Direction Arrow
215(1)
Reviewing Market Maker Action
215(2)
Predicting Market Direction
216(1)
Customizable Features
217(2)
Window Size and Colors
217(1)
Data View Controls
217(1)
Market Maker/ECN Depth
218(1)
Aggregate Quotes
218(1)
A ``Live'' Look at Level II
219(4)
Trading Sequence No. 1: A Slight Push Upward
219(2)
Trading Sequence No. 2: A Downdraft
221(1)
Trading Sequence No. 3: Signs of a Turnaround
221(1)
Trading Sequence No. 4: The Slight Up Move Continues
222(1)
Getting Used to Level II
223(2)
Basic Technical Analysis Tools
225(20)
What Is Technical Analysis?
226(1)
Collective Behavior
226(1)
A Rear-View Mirror
226(1)
A Self-Fulfilling Prophecy?
227(1)
Using Technical Analysis
227(2)
What's It All For?
227(1)
Technical Analysis in Practice
228(1)
Creating a Study
228(1)
Types of Technical Analysis
229(1)
Channel Analysis
230(4)
Support and Resistance
230(1)
Trending Ranges
231(1)
Breakouts
232(1)
Bollinger Bands
233(1)
Pattern Analysis
234(5)
Pennants
234(2)
Multiple Tops and Bottoms
236(1)
Head-and-Shoulders Pattern
236(1)
Cup-and-Handle Patterns
237(2)
Trend Analysis
239(1)
Moving Averages
239(1)
Using Moving Averages
239(1)
Oscillators
240(2)
MACD
240(1)
Stochastics
241(1)
A Few Thoughts About Technical Analysis
242(3)
Remember: Data Doesn't Replace Judgment
242(1)
Applying Science to Chaos
242(3)
Candlestick Charting
245(14)
What Are Candlestick Charts?
246(2)
Parts of a Candle
246(1)
How to Use Candlestick Charts
247(1)
It's About Size, Shape, and Position
247(1)
Single Candle Patterns
248(3)
Basic Candles
248(1)
Sharper Images in Single Candles
249(2)
Double Candle Patterns
251(4)
Tweezers and Engulfing Lines
251(1)
Stars and Doji Stars
252(1)
Haramis
253(1)
Other Double Patterns
254(1)
Multiple Candle Patterns
255(2)
Soldiers, Crows, and Threes
255(1)
Morning and Evening Stars
256(1)
Looking at a Real Chart
257(2)
Part 5: Developing Your Own Trading Style
259(60)
The Day Trader's Playbook
261(20)
Deciding What to Trade
262(2)
The Specialist Expert
262(1)
Searching the Radar: The Opportunist
262(2)
Trading Styles Reviewed
264(1)
The Pure Dealer
265(3)
How and Why
265(1)
Stock Selection
265(1)
Signs of Strength, Signs of Weakness
266(1)
Knowing the Market Makers
266(1)
Head Fakes
267(1)
Discipline
267(1)
Momentum Trading
268(2)
How and Why
268(1)
Finding Breakouts
269(1)
Trading Breakouts
269(1)
If It Doesn't Work, Bail
270(1)
Trading Gaps
270(1)
The Day Trader's Play
271(1)
Finding Gap Stocks
271(1)
Big Players: The Hammer and the Ax
271(1)
The Day Trader's Play
272(1)
Fake Swings
272(1)
Momentum Trading Pitfalls
272(1)
Range Trading
273(3)
How and Why
273(1)
Signs of Change
274(1)
Breakout Patterns
274(1)
Higher Highs, Lower Lows
274(1)
Narrowing Ranges
274(1)
When Resistance Becomes Support
275(1)
The Day Trader's Play
276(1)
Range Trading Pitfalls
276(1)
Short Selling
276(5)
How and Why
277(1)
Short-Selling Situations
277(1)
The Day Trader's Play
278(3)
Developing Good Trading Habits
281(14)
Trading Is a Business
282(1)
Traders as Professionals
282(1)
The Professional Ethic
282(1)
The Trading Business
282(1)
Core Habits
283(1)
Discipline
283(1)
Detached Emotions
283(1)
Positive Attitude
283(1)
Willingness to Learn
284(1)
Tactical and Practical Considerations
284(3)
Select Stocks Consistently
284(1)
Trade Only When There's an Opportunity
284(1)
Don't Wait for the Perfect Trade
284(1)
Don't Wait for the Perfect Fill
285(1)
Don't Forget About Gravity
285(1)
Don't Fight the Tape
285(1)
Get Out at the Right Time
285(1)
Be Willing to Move On
286(1)
Pick Targets---And Stick to Them
286(1)
Avoid Greed
286(1)
Stay With What's Comfortable
286(1)
Common Sense
287(1)
Managing Your Money
287(1)
Risk Management
287(2)
Risk vs. Reward
288(1)
At-Risk Amount
288(1)
When to Hold, When to Fold
289(1)
Hedging
289(1)
Money Management
289(2)
Keeping Score
289(1)
Selling Rules
290(1)
Half Selling
290(1)
Doubling Down
290(1)
Never Overextend
290(1)
If You Prefer: Bad Habits to Avoid
291(4)
Trading at the Speed of Thought
295(24)
A Bigger Picture
296(1)
Are You Prepared to Trade?
296(1)
Practice Makes Perfect
296(1)
Strengths and Weaknesses
296(1)
The Trader's Trifecta
297(1)
About Risk
297(2)
Start at the Right Pace
298(1)
Expect to Lose at First
298(1)
Expect to Be Overwhelmed
298(1)
Turning Experience into Learning
299(1)
Learn to Diversify
299(1)
Getting Started
300(1)
Making a Good Plan
300(1)
Deciding on Your Level of Commitment
300(1)
Learning by Doing
300(1)
Shopping Carefully
300(1)
Setting Space Aside
301(1)
Paper Trading
301(1)
Training Your Brain
302(1)
Brain-Eye Coordination
302(1)
Learning How Your Brain Works
302(1)
The Future of Day Trading
303(2)
Appendixes
Trading Terms
305(8)
Market Maker and ECN Symbols
313(6)
Index 319

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