Day Trading Stocks the Wall Street Way

A Proprietary Method For Intra-Day and Swing Trading

Josh DiPietro

• Publisher: Wiley
• Year: 2015
• Print ISBN: 9781119108429
• eBook ISBN: 9781119150497
• Edition: 1
• Topic: Business
• Subtopic: Investments & Securities
• Index: Business

Avoid bogus trading systems, learn from a real day trader, and make consistent profits day trading stocks

Day Trading Stocks the Wall Street Way: A Proprietary Disclosure on Intra-Day Trading and Swing Trading Equities provides a real-world guide to successful day trading, and gives you the tools, techniques, and tested, reliable methods you need to trade like the pros. Written by a seventeen-year day trading veteran, this guide talks you down from the industry hype to give you a realistic grounding in self-discipline, consistency, and patience while teaching you the hard skills you need to have a real chance of success.

Avoid losses by swerving from the typical beginner's path of seminars, software, and major brokerage houses, and instead develop the insights that lead to real, long-term profits. With an engaging and humorous tone, the author relates his own experiences and lessons learned to teach you the do's, the don'ts, and the ingredients for success. You'll discover Josh DiPietro's FUSION TRADING SYSTEM—a proven method developed from years of reliability testing. He'll show you how intra-day setups and swing trading setups can be merged to develop a perfect trade.

The surest path to failure and tremendous financial loss begins with the over-eager, overly optimistic amateur trader who sees day trading as a quick and easy path to wealth. This book gives you a much more realistic outlook, and the fundamentals you need to make the most of the market.

• Get an honest perspective on real-world day trading
• Gain the wisdom of experience and avoid common pitfalls
• Learn the framework to Josh Dipietro's profitable FUSION TRADING SYSTEM

A poorly defined trading approach will cost you more money than you will make, rendering your day trading venture a potentially damaging net loss. Day Trading Stocks the Wall Street Way: A Proprietary Disclosure on Intra-Day Trading and Swing Trading Equities teaches you the avoidance of loss, the discipline, and the transparent strategies of success, so you can play the market to win.

Part I
Mastering Your Mindset Before You Absorb the System by Day Trader Josh

---

Note: This section contains 14 generalized lessons based on the premise of my first book, The Truth About Day Trading Stocks. Each lesson includes updates and changes I've made since its publication in 2009.

---

Lesson 1

Control of Emotions and Mastery of Focus

The Fear and Greed Factors

Nothing affects your trading behavior like these two disruptive emotions. You need to be aware of their influence whenever you're in a trade. The fear factor keeps you safe, but you make very little money. The greed factor tempts you with the chance to make a lot of money, but it usually just gets you in trouble.

Fear is a natural instinct. From birth, you're hardwired to avoid risk. But greed has the power to override fear and cause you to do things that you normally wouldn't. In day trading, fear and greed have to be squarely faced, always watched out for, and tamed. You can never totally apprehend their influence on your subconscious. No one is completely immune to these overwhelming impulses, but you can train yourself to resist them in each of your trading decisions.

How to Control Them

The way to keep fear from manipulating your performance is to limit your exposure. This is why I stress that you only trade in 100-share blocks, and sometimes less. With 100-share blocks you won't feel as much fear as when you're wrestling with 1,000-share blocks.

Suppose you're in a trade with 100 shares and the stock moves against you by a full dollar. You're only down $100, not so bad. But what if you're holding 1,000 shares? Then you're down $1,000. You will soon find that I trade stocks that can fluctuate one full dollar every minute. If you're a nervous wreck while trading a position, then most likely you're trading more than 100 shares per trade.

Other ways to avoid fear include:

• Not holding a losing position all day—always having an exit plan
• Not holding an intra-day position overnight because it closed in the red
• Not trading with your rent/mortgage money
• Not trading when you've been consistently losing for days—taking a break instead

If you find yourself unhappy with making small profits all day, then greed can start kicking in, and you can quickly get in way over your head. The way to avoid a disaster while sating your urge to trade more than 100 shares is to deliberately limit yourself to a maximum of 300 shares (three tiers) per trade setup whenever you're intra-day trading.

Other ways to avoid greed include:

• Never recklessly average-down a position. Trade real price levels.
• Avoid breaking your consistency. If you've been trading a certain way all day, do not start trading differently in the last hour.
• Never break the Golden Rules.

How to Stay Focused While Trading—All Day

Focus is the quintessential factor in the success rate of every day trader. Here are crucial ways to stay focused:

• Never take your eyes off your screens while in a trade, especially when it's an intra-day trade for 15 cents. That means no lunch breaks, no phone calls, no trips to the bathroom, and so on. Before you engage in any activity that distracts you from watching your screens, you must close your positions, hopefully at a profit.
• Don't trade on a day when you have personal/family issues that will most likely cause you to trade on emotion.
• If you have a hangover, then wait until late afternoon to start trading. You don't have to start early in the morning.
• If there's a major national crisis occurring, and it's having an effect on the stock market, then you should take the day off.
• Drink coffee to stay alert, and exercise and stretch at your trade station. The exercise is especially effective because your blood circulation is improved. You'll be more energized, but also more calm, and you won't get fatigued and have muscle aches.

After I've trained you, if you don't stray from my system, you'll be a much better day trader. What I teach is very structured and procedural and will keep you on target and alert, that is, focused. Once you master this system, you'll know when you've made a mistake, and how. But most of all, you'll know when you're about to make a mistake in real time, and how to head it off, because you're focused.

Lesson 2

How Overconfidence Can Destroy Your Trade

Confidence Is Great Until You Have Too Much

Overconfidence, like the greed factor, makes you take too many risks. But it's not about the itch for more profits. It's about getting too complacent with your trading style, or trying new trading strategies without testing them first on the demo (paper-trading). Worst of all, it's about trading this system that you see in a book without being formally trained in it.

Here are some typical indicators that you're trading with overconfidence:

• You place a trade with very little prior research—you just dive in.
• You stay in a trade past your predetermined exit points. You place a trade seconds before a major report is released, and you try to predict which way the market will respond (you're trading into an earnings release).
• You add more shares to your trade and don't have enough capital to hold overnight, and then you find yourself holding more than 300 shares in one single intra-day trade.
• You recklessly average down a trade and hold a losing position.

The telltale sign of overconfidence is inconsistency with profits and/or losses. For instance: you've been steadily making between $500 and $1,000 per day in profits, and then suddenly you're making or losing $3,000 per day. This means you've started trading outside of your consistency levels, and the reason is you're getting cocky.

Think about it. When you day trade, you must keep your levels uniform. That may sound boring and sometimes it is, but uniformity keeps you safe from reckless trading.

This will keep your confidence realistic:

• Only trade stocks that have passed the criterion-selection test (this I clarify later). Only trade them once you've tested them on your demo (paper-traded).
• Don't ever try to make “double” the amount on a trade—not until you're much more experienced.
• Stay highly consistent when trading: trade in 100-share blocks, and then slowly progress from there. That's what I teach in my program. If you jump right in and try to apply a new system to more than one stock and more than 100 shares, that's overconfidence. Your failure is practically guaranteed. You're spreading yourself way too thin.
• Always use the Golden Rules. Never stray from them. As soon as you do, you're trading on confidence and not trading the system—you're gambling.

In the past, some of my own biggest bloopers were seeded by overconfidence. If you're under my wing, I will not allow you to make my mistakes. You'll be way too busy struggling to apply all the rules and procedures and you won't have the time to get reckless.

Lesson 3

Dealing with Your Impatience

Traders Have to Cope with Two Kinds

The hardest lessons a trader will learn usually result from impatience. In day trading, you deal with two forms of this weakness.

The first kind of impatience you're going to feel right out the gate, from your first day as a beginner. Most amateurs want to fast-track their way to pro-trader glory. What they don't understand is that the true road to success ...

Table of contents

• Cover
• Title Page
• Copyright
• Table of Contents
• Author's Note
• Three Essential Prerequisites
• Introduction
• Discovering Day Trader Josh
• Acknowledgments
• Part I: Mastering Your Mindset Before You Absorb the System by Day Trader Josh
• Part II: Day Trader Josh's Intra-Day Trading Methodology
• Part III: Day Trader Josh's Swing Trading Methodology
• Part IV: The Fusion of Intra-Day and Swing Strategies
• Part V: Advanced Rules and Procedures
• Part VI: Trading and Training with Day Trader Josh
• About the Companion Website
• My Final Words to Readers: Warnings, Reminders, and Prospects for the Future
• Index
• End User License Agreement