Part II - How Small Traders Overcome Inherent Disadvantages in Day Trading

This is a very important video as it explains how to best use our free videos for inspiration and how to safeguard you against too big losses testing out new ideas. For example the use of Simulator will protect your trading capital.

Continue from Part I...

Introduction
I received the following from Yogesh, a very good virtual trader on howthemarketworks.com. He was unable to post it as a response to my blog so he forwarded it to me. It is an excellent commentary so I am posting it in its entirety and I am responding 'in blue' to it paragraph by paragraph with resolutions to handle the disadvantages to small time traders. Here are his comments and my response: 

There are many other things that are different here. So don’t think that if you do well here you could make money in real trading. Mack’s blog has good things to say, and what to do. But he has not told you how to do that and where to find the information. I will try and give you whatever I know and practice.

The above is true, however, I entered some related websites in the comment section of the contests and I will be entering relative links to the blog. As a facilitator, I wanted the traders to do some searching for themselves. Also, I do not share my trading set up and the proprietary indicators that I use. I believe each trader has to choose or develop his/her own set up.

Charts and Portfolio
It is very important to follows the charts and know the indicators. You can find them at freestockcharts.com. Find different indicators that suit you and study them at investopedia.com and onlinetradingconcepts.com. I use volume, MACD 12/26, rsi2, Exponential Moving Averages 6 and 30 (i.e. 6 days and 30 days), Bollinger Bands and Stochastic Fast. You may make your portfolio with freestockcharts.com.

I did share about freestockcharts.com before. I even mentioned their premium paid service called TC2000.com. It is similar to the free version but there are many more options. To subscribe to TC2000 is about $100 per month. I am a subscriber. You can even go to the Worden Brothers website, worden.com and watch free Webinars to learn how to use the software and to understand the different features such as indicators and what they mean etc. 

Selection of stocks
1. Go to barchart.com and under Signals, you will find Top Signal Stocks and Bottom Signal Stocks. Make 2 separate portfolios for use of Long and Short. Choose stocks with daily volume of 500,000 and more only. Below that, in this contest, it will go to delayed orders. Higher the volume more volatile it will be. Lower volume stock price change slowly and keep you waiting for long time for a price change. Next to Signals is Hot Stock topic. It gives the top 10 positive/negative moving stocks at that time. Playing these stocks is very useful in this contest.

I use the scanner in TC2000 or if you use the free version there is a scanner you can use there too. My scanner is real time, auto updating, and the best stocks according to my criteria always come to the top of the results. I simplify my set up as much as possible.

2. Yahoo Finance, under Market Movers, gives most active, %gainers and %losers, that are very good guide for selection of stocks. (Remember the volume).

Gainers and losers are old and after the fact information. But you may use the info for trading second wave movement or the pullback and the comeback. My scanner provide me with all the stocks I need to trade. I only trade one stock at a time and every time I trade have from at least 6 or more candidates to choose from.

3. Its a good idea to keep track of earnings status of financial results. Its reaction gives sure up and down

This may have some benefits to long term traders. I do not trust the stock market. I do not listen to any news, period! I tune out all noise, and I focus as a laser/robot. All the information I need are shown on my chart set ups. I strive to be very, very simple.

4. CNBC will give you an idea as to how the market is going to open that day at opening. So you can select long/short play.

This may have some benefit to swing traders or even some day traders. I am a scalper. See response to #3 above.

Continue on Part III...