Day Trade Online
by Farrell, Christopher A.Edition: 2nd
Format: Hardcover
Pub. Date: 2008-12-22
Publisher(s): Wiley
List Price: $29.95
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Summary
Day trading can be quite lucrative, but only if you know what you are doing. As Farrell points out: "Trading for a living is hard. Trading for a living over the Internet is even harder. There are many challenges and obstacles that confront you. Venturing into this jungle unprepared is a recipe for disaster." This straightforward guide provides the head start and heads up necessary to thrive as a day trader, covering everything from the dangers and pitfalls of trading online to an in-depth analysis of which trading techniques work and which don't. Day Trade Online, Second Edition presents inside information on the strategies of top trading firms, including the most secretive, misunderstood, and profitable function on Wall Street. Most importantly, you will learn to look at ten different stocks and pinpoint which one to trade, when, at what price, and why. With the right know-how, you will be able to apply this knowledge to every single stock that you screen.
Author Biography
Christopher A. Farrell is a national bestselling author and former Wall Street bond trader who currently runs the Farrell Preferred Stock Arbitrage Fund, LP, a hedge fund. He has been a guest on numerous television and radio programs, including CNBC and BBC World News, featured in magazines such as BusinessWeek and Worth, and has been a guest speaker at MIT. His works have been translated into numerous languages worldwide, including Korean, German, Russian, and Italian. Farrell is also the author of The Day Trader's Survival Guide (HarperCollins). He has over thirteen years of trading experience, and has traded over three billion dollars worth of stock since going out on his own. Farrell is a graduate of Colgate University and can be reached at www.farrelltrading.com.
Table of Contents
| Preface | p. xiii |
| Acknowledgments | p. xix |
| Introduction | p. 1 |
| The World of the Day Trader | p. 5 |
| Exploiting the Excesses of Capitalism | p. 7 |
| The House Edge | p. 9 |
| The Bid-Ask Spread | p. 11 |
| Introduction to Day Trading | p. 17 |
| Trading 101: Buying on Bad News and Selling on Good News | p. 19 |
| The Mind-set of an Online Day Trader | p. 19 |
| A Buyer When the Market Needs Buyers | p. 20 |
| Hit Singles, Not Home Runs | p. 20 |
| Brokerage Commissions Can Destroy Profits | p. 21 |
| Buy in on Fear, Sell in on Greed | p. 22 |
| The Slow Execution | p. 23 |
| Is the NYSE an Easier Market to Trade? | p. 24 |
| How to Beat Wall Street at Its Own Game | p. 25 |
| Exploiting Wall Street's Conflict of Interest: Market Orders versus Limit Orders | p. 27 |
| Understanding Wall Street's Conflict of Interest | p. 27 |
| Price Makers versus Price Takers | p. 29 |
| The Bargaining Process | p. 30 |
| Price Negotiation-Market versus Limit Orders | p. 32 |
| Wall Street's Prey | p. 34 |
| Prelude to the Bid-Ask Spread | p. 35 |
| The Day Trader's Crystal Ball: Understanding the Bid-Ask Spread | p. 37 |
| A Snapshot of a Moving Picture | p. 37 |
| The Mechanics of Price Movement-Understanding What Makes a Stock Move Higher | p. 39 |
| The Quote-Snapshot of a Moving Picture | p. 41 |
| The Market Order to Sell-Hitting the Bid | p. 46 |
| The Market Order to Buy-Lifting the Offer | p. 48 |
| The Limit Order to Buy-Bidding for Stock | p. 50 |
| Day Orders versus Good-until-Canceled (GTC) Orders | p. 52 |
| The Limit Order to Sell-Offering Stock | p. 54 |
| Haggling Over Nickels and Dimes | p. 56 |
| Moving the Stock Higher | p. 57 |
| The Role of the Specialist on the New York Stock Exchange | p. 61 |
| Using the Specialist System to Your Advantage | p. 64 |
| What If There Were No NYSE Specialist? | p. 66 |
| Buyer of Last Resort | p. 67 |
| Is the Profit the Specialist Makes Justified? | p. 68 |
| A License to Steal? | p. 68 |
| The Specialist's Limit Order Book | p. 69 |
| Being on Both Sides of the Market | p. 71 |
| Narrowing the Bid-Ask Spread | p. 72 |
| Wide Spreads Protect the Specialist from Volatility | p. 73 |
| Handling a Large Sell Order | p. 74 |
| The Real Intentions of the Specialists | p. 77 |
| Beware When the Specialist Takes the Other Side of Your Trade | p. 77 |
| The Day Trader as a Shadow Specialist | p. 78 |
| The NYSE's Fair Order Handling Rules | p. 80 |
| Never Reveal Your Hand | p. 85 |
| How Can You Determine Where the Specialist Lurks in the Stock? | p. 85 |
| Jockeying for Position | p. 87 |
| How Do You Know Where You Stand in Line? | p. 89 |
| When in Doubt, Ask the NYSE Floor | p. 89 |
| Tipping the Odds in Your Favor | p. 92 |
| Beware of the Specialist | p. 93 |
| Introduction to Scalping the NYSE: Taking Food Out of the Specialist's Mouth | p. 95 |
| The Day Trader's Secret Weapon: Exploiting the Bid-Ask Spread | p. 97 |
| How Can You Make Money Trading Stocks that Don't Move? | p. 98 |
| The Role of the Scalper | p. 99 |
| Hit Singles, Not Home Runs | p. 100 |
| Operating under the Radar | p. 100 |
| Avoiding the Glamour Stocks | p. 102 |
| Exploiting the Bid-Ask Spread | p. 103 |
| Finding the Trade's Sweet Spot | p. 103 |
| Simplifying a Complex Process | p. 104 |
| Other Moving Parts to This Trade | p. 105 |
| A Bet with the House? | p. 109 |
| Too Much Work for Only $100 in Gross Profits? | p. 110 |
| A Few Words on Risk | p. 110 |
| Trading the Market's Momentum: How to Profit from Volatility | p. 113 |
| Exploiting Market Volatility and Momentum: Strategies for Trading Volatile Stocks | p. 115 |
| The Specialist and the Upper Hand | p. 116 |
| Playing the Gap Open-A Strategy for Betting with the House | p. 117 |
| Buying on Bad News | p. 118 |
| Betting on the Specialist | p. 119 |
| Parameters of the Gap-Opening Trade | p. 122 |
| How to Tell If the Opening Trade Will "Clear" the Specialist's Limit Order Book | p. 124 |
| Selling before the Second Wave | p. 125 |
| Trading Tick for Tick with the Market Indexes | p. 127 |
| Why Limit Orders Don't Work in a Rally | p. 127 |
| Using the S&P Futures to Gauge the Sustainability of a Rally | p. 129 |
| Lightning-Fast Market Upsurge: How Offers Vanish in the Vapor Trail | p. 129 |
| Stock for Sale Becoming Scarce | p. 130 |
| Nasdaq and the Role of the Market Makers | p. 131 |
| A Few Words on Short Selling | p. 135 |
| Two Methods for Day Trading Nasdaq Stocks | p. 136 |
| The Apple Computer Trade | p. 139 |
| Buying Strong Stocks on Pullbacks | p. 140 |
| Opening the Stock Abnormally High | p. 141 |
| The Dangers of Buying a Strong Stock on the Opening Trade | p. 141 |
| Inflicting Heavy Damage on the Market Makers by Attacking Their Vulnerability | p. 142 |
| The Day Trader's Ticket to the Poorhouse: How I Managed to Lose $12,000 in Less than 24 Hours | p. 145 |
| The Pain of Missing a Trade | p. 147 |
| How Could the Stock Go Any Lower? | p. 147 |
| The Terrifying Feeling of Getting Caught in a Downdraft | p. 148 |
| A Feeling of Irresistible Greed | p. 148 |
| The Need to Break Even | p. 150 |
| Buying the Stock for the Third Time | p. 151 |
| Feeling of Devastation Leads to Useful Insights | p. 152 |
| Learning from the Mistake and Moving On | p. 156 |
| Can the Quoted Market Always Be Trusted? | p. 156 |
| A Fool and His Money Are Soon Parted | p. 159 |
| The Day Trader's Arsenal: Online Brokers, Trade Commissions, Real-Time Quote Systems, and the Home Office | p. 161 |
| Choosing an Online Broker | p. 161 |
| Negotiate the Best Possible Commission Rate | p. 163 |
| Make Sure that the Broker Can Route Directly to the NYSE | p. 163 |
| Per-Share versus Per-Trade Commission Rates | p. 164 |
| Setting up at Least Two Accounts | p. 164 |
| System Crashes and the Late Fill | p. 165 |
| Customer Service, Back-Office Problems, and Trade Discrepancies | p. 167 |
| The Remedy-Keep Good Trading Records | p. 167 |
| The Home Office and the Virtual Trading Floor | p. 169 |
| Considerations for Trading for a Living: The Allocation of Trading Capital, the Pattern Day Trader Rule, Using Margin and Trading Part-Time vs. Full-Time | p. 173 |
| Allocation of Trading Capital | p. 174 |
| The Pattern Day Trader Rule | p. 177 |
| Trading on Margin | p. 177 |
| Margin Calls | p. 178 |
| Part-Time versus Full-Time Trading | p. 179 |
| Index | p. 183 |
| Table of Contents provided by Ingram. All Rights Reserved. |
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