REAL-WORLD STRATEGIES

FOR
STOCK DAY TRADERS

Barry Rudd
 REAL-WORLD STRATEGIES
FOR
STOCK DAY TRADERS
by
Barry Rudd

All rights reserved.

This manual, or parts thereof,
may not be reproduced in any form without the
prior written permission of the author.

DISCLAIMER: Trading stocks can entail substantial risk. No claim is

made by the author that the trading methods and techniques presented
herein will result in profits and will not result in losses. None of the
ideas contained in this manual should be construed as an offer to buy or
sell stocks. Stock trading may not be suitable for all people. Do not
trade money that you cannot afford to lose. Each trader is responsible
for his or her own actions, if any. All information and examples in this
manual are strictly for educational purposes only. The author, publisher
and distributors of this manual assume no responsibility for your own
trading results.
 FOREWO RD

Th i s m an u al i s fo r b oth the b eg i n n i n g a n d s e as o n ed stock d ay

trad e r , w ritte n b y a fu l l -ti m e stock d ay trad e r . It i s h ow I m ake
m y l ivi n g . Each of th e fo l l owi n g secti o n s of strateg i e s is l a i d
o u t i n ex p l i cit d etai l . Th e m an u al i s " lo n g " o n actu a l c h art
exam p l e s a n d " s h o rte r" o n text.

The text i n eac h sect i o n s u cci n ctly l ays o u t t h e u n d e rp i n n i n g s

of th e s p ecifi e d strategy a n d s u p p l i e s the co m p re h e n s ive
fra m ework fo r th e acco m p anyi n g c h arts . A l l c h arts are
p rese nted i n a 5 - m i n u te bar c h art o r can d l e st i c k c h art fo r m at.
I b e l i eve t h at th i s is th e best way to convey to th e stock d ay
trad e r th e real wo r l d of d ay trad i n g d ec i s i o n s fro m m o m e nt to
m o m e nt.

As yo u read th ro u g h th i s m a n u al , u n d e rsta n d t h at it i s a
h an d s -o n , g ritty p rese n tat i o n of w h at i s real a n d w h at wo rks .
Th eory i s g reat, b ut th e real i ty of actual stock d ay trad i n g i s
w h at m akes o r b reaks yo u th ro u g h o ut each trad i n g s e s s i o n .
That i s why yo u w i l l fi n d s o m an y exte n s i ve l y an n otated c h a rts.

Th at i s wh at th i s m an u al was crafte d fo r - yo u th e trad e r w h o

i s r i s k i n g yo u r h ard e a r n ed m o n ey w i t h e a c h c h o s e n trad e .
Afte r read i n g , d ig e sti n g a n d o b s e rv i n g t h e tech n i q u es i n each
of the fo l l owi n g s ecti o n s , you s h o u l d b e a b l e to recog n i z e a n d
i m p l e m ent each trad i n g tech n i q u e wh e n ap p l i cab l e .
It req u i res work a n d p ractice eve ry d ay. D ay trad i n g i s n ot
easy, a n d p rofits await o n l y those w h o p o s s e s s d i sti n ct, ro b u st
trad i n g strate g i e s p a i red with good m o n ey m an ag e m e n t.

As yo u i m m e rs e yo u rs e l f i n th i s m a n u al, I b e l i eve yo u w i l l be
ab l e to i n co r p o rate a l l of the i d eas and s p ec i fi c tec h n i q u e s i n to
yo u r own trad i n g . I h o p e t h at th i s h e l p s yo u g row yo u r trad i n g
abil i ty a n d p rofits with ti m e a n d ex p e r i e n c e .

Barry R u d d

* Al l c h art exam p l es created w i t h "Trad eCh arts" b y Trad eCast

 CONTENTS

I. A QU ICK R EVI EW : BAR CHARTS & CAN D LESTICKS

II. TRA D I N G O N I NTRA DAY R E LATIVE STREN GTH

III. PRICE WAVES

I V. FAD E TRA D I N G M I CRO SU PPORT jRESI STA N CE

V. P I N G P O N G P LAYS

VI . TRA D I N G N EW I N TRA DAY H IG H S & LOWS

VI I . P LAY I N G STOCK S ECTO RS

VI I I . FI N D I N G TH ESE TRA D E SETUPS I N R EAL TI M E

IX. N EWS THAT AFF ECTS TH E M A R K ETS

X. CO NCLU S I O N

XI . WEBS ITE RESO U RCES

A QU I C K R EVI EW:
BAR C HA RTS &
CA N D LEST I C KS
 A QUICK REVIEW: BAR CHARTS & CANDLESTICKS

S i n ce c h arts co m p ri s e a l arg e p o rti o n of th i s m a n u a l , l et ' s

q u i ck l y rev i ew b oth conve nti o n a l b a rs a n d can d l esti c k s . Al l of
th e c h a rt exam p l e s i n each of the fo l lowi n g s ecti o n s w i l l s h ow
i ntrad ay trad i n g activity. T h e i n d i ce s w i l l b e s h ow n as
can d l esti cks w h i le stocks w i l l b e d i s p l ayed as reg u l ar b ars .
Each bar o r can d l e sti c k w i l l refl ect 5 m i n ute s worth of trad i n g
fo r b oth stocks a n d i n d i ce s .

Th e sta n d ard O pe n - H i g h - Low-Cl o s e bar s i m p ly s h ows t h e fi rst

trad e d u r i n g a 5 - m i n ute p e ri o d a l o n g with the h i g h est, l owest
a n d l ast trad e . Th e n the n ext bar b eg i n s as t h e co m p ute r
c reates it fro m yo u r q u otes w h i l e t h ey stream i n real -ti m e .

H e re i s the sta n d ard O p e n - H i g h - Low-Cl o s e b a r :

High

..-- Close

Open ---.

Low

A can d l estick bar s h ows th e sam ,e i n fo r m at i o n , o n ly i n a

s l i g htly d i ffe rent fo rm at. A box o r recta n g l e (refe rred to as the
" real b od y"} s h ows w h e r e t h e o p e n a n d c l o s e were fo r th e bar.
Th e to p a n d b otto m of th e box are either t h e o p e n o r th e c l os e
d e p e n d i n g o n w h eth e r th e c l o s e w a s above o r b e l ow the o p e n
o f th e bar.

H e re is a c a n d l e st i c k :

High

+- Close

Open --.

Low

Th e body (recta n g le) s h ows th at t h e c l os e i s a b ove t h e o p e n

fo r th i s b a r . H ow d o w e k n ow t h at i t was n 't v i ce versa?
Becau se, we can c h oose o u r co m p u te r s etti n g s fo r t h e
can d l esti ck s o t h at the b o d y i s Upai nted" w i t h a s p ec ifi c co l o r
fo r bars that c l o s e above t h e o p e n . A d iffe re nt c o l o r c a n b e .
s p ecifi ed fo r can d l esti cks t h at c l o s e b e l ow the i r o p e n i n g p ri ce .

I n the exa m p l e above , w h ite was c h o s e n to s i , g n i fy a c l o s e

above th e o p e n . I n th e fol l owi n g e x a m p l e, b l ack h as b e e n
s pecifi e d to s h ow a bar th at c l osed d own b e l ow its o p e n .
 High

Open ---.

.-- Close

Low

Th i s bar c l osed d own . I n b oth exam p l e s yo u can sti l l see

wh e re the h i g h a n d l ow trad e s were d u ri n g the S- m i n ute
p e ri od with th e " s h ad ows" (or l i n es) exte n d i n g above a n d
b e l ow the b o d y of th e can d l e sti c k .

The actu al ca n d l estick c h art e x a m p l e s i n th i s m a n u a l are

co l o red w h ite fo r a c l o s e ab ove th e o p e n . The b l ack
can d l esticks d e p i ct a c l o s e b e l ow t h e o p e n . Eve n th o u g h th i s
i s b as i c c h arti n g i n fo r m ati o n , I fe e l i t i s i m po rtant to m ake
s u re yo u k n ow wh at yo u are s ee i n g as yo u revi ew a n d analyze
each i n d ivi d u al exam p l e .
T RA D I N G O N I N TRA DAY
R E LATIVE ST R E N G T H
 TRADING ON INTRADAY RELATIVE STRENGTH

Each i n d iv i d u al stock s h ows its true co l o rs w h e n co m p ared to

its i n d ex on the i ntrad ay 5 - m i n ute b a r c h a rt . I s th e stock
weak or stro n g re l ative to the i n d ex? W h e re d i d th e i n d ex a n d
t h e stock o p e n i n re l at i o n t o th e i r p ri o r d ay ' s c l o s e? Are t h e
b uyers o r s e l l ers i n control o f th e stock at t h e o p e n i n g b e l l a n d
d u ri n g the fi rst few m i n utes of t h e t rad i n g s e s s i o n ? A l s o , a s
the d ay u nfo l d s , w h e n c a n r e l ative s tre n gth s h ow yo u as a
trad e r t h at the stock wants to g o l o n g or s h o rt?

By co m p ari n g t h e 5 - m i n ute bar c h a rt of a stock with t h e 5 -

m i n ute bar c h art of th e i n d ex , a p ote nt b it of i n fo r m at i o n i s
i m m e d i ately d i s p l ayed to th e trad e r. If, fo r exa m p l e , t h e i n d ex
g a p s d own fro m t h e p ri o r d ay ' s c l o s e , yet a stock o p e n s eve n
with o r s l i g htly above its p ri o r d ay's c l o s e , t h e n th at stock i s
stro n g re l ative to th e m arket. I f a n d w h e n a n overal l m arket
ral ly e n s u e s a n d the i n d ex b eg i n s m ovi n g u p , the stock t h at
h e l d u p stro n g o n th e o p e n i s m o re l i ke l y to i n iti ate a m ove
u pward s i n p ri ce .

Th ese m oves off of th e o p e n can ofte n b e stro n g , fast p ri ce

s p i ke s . The b uyers h e l d th e stock u p w h i l e t h e m arket g a p p e d
d ow n . If t h e i n d ex starts t o ral l y , i t effective l y fl as h e s a g re e n
l i g ht fo r th e stock t o b l ast o u t o f th e starti n g b locks . . . ofte n at
a fu l l s p ri nt.

Co nve rs e ly , i f th e i n d ex g ap ped up stro n g ly as th e m o rn i n g

b e l l r i n g s , a n d a stock l an g u i s h e s b y o pe n i n g at o r s l i g htly
b e l ow its p ri o r d ay ' s c l o s e , t h e n the s e l l e rs a re l i ke l y i n contro l .
I f t h e m arket ro l l s ove r a n d b eg i n s t o s e l l off, n o o n e i s u s u a l l y
th e re to s u p p o rt t h e weak stock. M any ti m e s t h i s an e m i c
appearance p reced e s an i n evita b l e p l u m m et i n t h e stock ' s
p ri ce .

N ot o n ly wi l l i ntrad ay re l ative stre n gth offe r trad i n g

o p p o rtu n ities off of the o p e n , b ut t h e d i s parity b etwee n t h e
i n d ex a n d stock o n t h e 5 - m i n ute c h a rt g rap h i ca l l y p o i nts th e
way to trad i n g o p p o rt u n ities th ro u g h o u t th e s e s s i o n .

I n trad ay re l ative stre n gth fu n cti o n s a s a var i ab l e to e n h an ce a

pote ntial d ay trad e t h at h as b e e n i s o l ated based u p o n oth e r
crite r i a a n d analys i s . B ut m o re i m p o rtantly, t h e r e l ative
stre n gth (o r we a k n e s s ) of a stock can b e trad ed as a sta n d
a l o n e tech n i q u e . Th i s i s e s p ec i al ly effective i f you reg u l arly
fo l l ow a bas k et of stocks eve ry d ay.

Ove r ti m e and with e x p e r i e n ce you co m e to k n ow the d i sti n ct

"pe rso n al ity" of h ow each stock b e h aves a n d m oves o n its 5 -
m i n ute c h art . Pai ri n g th i s k n ow l e d g e o f a stock ' s p e r s o n a l ity
with its c u rre nt re l ative stre n g t h to the i n d e x p rovi d e s s o m e
very powe rfu l trad e s .

M o n ito r the 5 - m i n ute c h arts of yo u r bas ket of stocks a l o n g

with t h e i n d ex c h a rt a s th ey u n fo l d tog et h e r . Yo u ' l l b e g i n to
see t h e c h a rt fo r m ati o n s s etti n g th e m s e lves u p a n d l e a r n
w h e re to e nte r a stock l o n g o r s h o rt fo r h i g h - p ro b a b i l ity
trad i n g o p p o rtu n ities .
So wh i c h i n d e x s h o u l d yo u u ti l i z e fo r c h arti n g com p a r i s o n ? It
is very s i m p l e . I f yo u are track i ng a NAS DAQ sto c k, t h e n watch
e i t h e r t h e NASDAQ- l 0 0 o r NASDAQ Co m po s i te i n d ex . For a
NYSE i s s u e , l o o k to t h e NYSE Co m p o s ite o r D ow J o n e s
I n d u strial Averag e .

I n ad d iti o n to t h e stock i n d i ce s , a l s o track the SP- SOO futu res

contract with a S- m i n ute c h a rt. It w i l l te n d to track t h e oth e r
i n d i ce s ' d i recti o n a n d tren d m o re ofte n t h a n n ot. I t a l s o reacts
o n m o m e nt-to- m o m e n t d i rect i o n c h a n g es m o re q u i ckly. If it
is m ovi n g i n lockste p with t h e i n d e x yo u are tracki n g fo r yo u r
stocks, t h e b ette r th e o utco m e of any p ote ntial trad e .

If t h e fut u res contract i s n ot tracki n g t h e i n d ex (s u c h as t h e

NASDAQ Co m po s i te o r 1 00 ) , always d efa u lt yo u r an alys i s to
th e act u a l i n d ex of t h e stock t h at yo u a re co n s id e r i n g fo r a
trad e .

I b e l i eve t h e m ost effective way fo r yo u to l earn , u n d e rsta n d

a n d real ly trad e u s i n g re l ative stre n gth a n d wea k n e s s i s with
actu al c h a rt exa m p l e s . The refo re, I am i n c l u d i n g q u ite a few
c h arts to g ive yo u a real -wo r l d , h a n d s - o n fee l fo r trad i n g th i s
m arket p h e n o m e n o n .

Each of t h e fo l l owi n g p a g e s w i l l s h ow a S- m i n ute can d l e st i c k

c h a rt o f the i n d ex at th e top . The S- m i n ute b a r c h a rt of a
stock w i l l b e al i g n e d b e n e ath it. Exte n s ive a n n otati o n s s h o u l d
h e l p to ex p l a i n a l l o f t h e an alys i s a n d p ote nt i a l e nt ry a n d ex it
areas .
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P R I C E WAVES
 PRICE WAVES

To effectively u n d e rsta n d th e m arket a n d its p arti c i p ants , the

b uyers a n d s e l l e rs , you m u st d eve l o p a fu n d a m e n tal g ras p as
to h ow a n d why p ri ce m oves up a n d d ow n . Th i s a p p l i e s to
b oth i n d ivi d u al stocks as w e l l as t h e overal l m arket i n d i ce s . I n
ad d iti o n , the m oves u p a n d d ow n i n p rice can b e o b s e rved i n a
vari ety of ti m e fram es: yearly, m o nt h ly, we e kl y , d ai ly o r
i ntrad ay.

Price fl u ctuates i n waves of b uyi n g t h at p u s h the m arket u p

a n d s e l l i n g t h at p u s h t h e m arket d ow n . Th i n k h ow t h i s
d y n am i c u n fo l d i n g of u p a n d d ow n p ri ce waves (acti o n
react i o n ) s h o u l d i nfl u e n c e yo u r d ec i s i o n s as an eq u ity DAY
trad e r . We wi l l co n c e r n o u rse lves p ri m ari ly with t h e e b b a n d
fl ow o f i ntrad ay p ri ce fl u ctu ati o n s l asti n g fro m seco n d s to
m i n utes a n d eve n h o u rs .

At any o n e m o m e nt , a stock i s o n l y worth w h at t h e co l l ective

p e rcepti o n of the c u rrent b uyi n g a n d s e l l i n g p arti c i p ants
d eterm i n e t h ro u g h th e i r acti o n i n a stock. H ow i s th i s
con stantly c h an g i n g worth o r p ri ce fo rm u l ated ? Th i s " p ri ce
d i scove ry" i s m e rely a s u m of a l l t h e p a rti c i p ants acti o n s - the
val u e i nve sto r, th e fu n d m a n ag e r , p rog ram trad i n g , the
i nvesto r cl u b s , swi n g trad ers , d ay trad e rs an d m an y m o re .
Eac h o f t h e s e parti c i p ants takes acti o n b as e d o n th e i r own
parti c u l a r ti m e fram e a n d re as o n (s).
I n oth e r word s , a stock h as a c o n sta n tl y c h an g i n g " p r i ce tag "
attach ed to it d e rived fro m actio n s o f al l m arket p a rt ic i p a n ts at
any o n e m o m e nt. A trad e r o r i nvesto r can m a k e t h e cas e t h at
earn i n g s s h o u l d b e refl ected i n a stock ' s p ri ce ove r the l o n g
te r m , b ut w h at h a p p e n s i n t h e m e a n ti m e? P r i ce wave s .

As a d ay trad e r, you m u st take i nto acco u nt th e n at u re o f

i ntraday p ri ce waves (or swi n g s) a s you react to m arket m oves
and m ap o ut yo u r trad i ng strateg i e s . So we s h o u l d e n g a g e i n
s o m e s l e u th i n g . W h at are p ri ce waves, a n d h ow d o th ey
o p e rate a n d fu n cti o n o n th e s h o rter i ntrad ay ti m e fram e? M o re
i m p o rtantly, h ow s h o u l d t h e s e p ri ce waves be i n corp o rated
i nto yo u r trad i n g d ec i s i o n s?

Be aware th at I am n ot referri n g to a n y p a rti c u l ar wave trad i n g

m ethod s u c h as E l l i ot Wave , struct u red with s p ec ifi c r u l e s fo r
its i m p u l s e a n d corrective waves . A s a d ay trad e r , I s i m p ly
want to u n d e rsta n d th e typ i cal n atu re of i ntra d ay u p a n d d ow n
p ri ce swi n g s a n d h ave s o m e I d e a of w h o the m aj o r p a rti c i p ants
are.

Th e fo l l owi n g d iag ra m s use a l i n e to re p re s e n t i n trad ay p ri ce

m ove m ent. Th i s p ri ce activity g rap h i ca l l y d i s p l ays the m o st
typ i cal m arket p atte r n s to s h ow th e b eg i n n i n g a n d e n d of p ri ce
wave s , a n d w h e n a n d w h e re the b uyers o r s e l l e rs are i n
contro l .
Th e stro n g est t re n d i n g m ar kets w i l l stead i ly g ri n d l o n g o r
s h o rt with n u m e ro u s , s m a l l e r u p a n d d ow n wave s . Th e
exam p l e b e l ow s h ows a very b u l l i s h u p trend . It w i l l h ave
m an y s m al l p u l l b acks (o r waves ) , b ut th e u p waves m ove
fu rth e r a n d p e r s i ste ntly take th e sto c k h i g h er i n w h at co u l d be
co n s i d e red a l arg e r overal l wave u p fo r the trad i n g s e s s i o n .
Th e b uyers a re fi r m l y i n contro l . B u yi n g o n d i p s offers
favorab l e d ay tradi n g o p p o rt u n it i e s , e s p e c i a l l y for a c h a n ce to
p arti c i pate i n a m U lt i p l e h our tre n d trad e .

Th e o p pos i te o f a t re n d can b e see n b e l ow w h e re a stock

trad es in a s i d eways c h o p py m a n n e r. It is n o i sy l oo k i n g a n d
h as very l ittl e p re d i ctab i l ity fo r trad i n g .
Alth o u g h th i s n ext a p p e arance s ee m s s i m i l ar to t h e p ri o r o n e,
it i s d iffe rent. M ore reg u l arity a n d co n s i ste n cy can b e
o b s e rved i n t h e p ri ce waves . Why? Beca u s e of h o r i zo ntal l i n e s
t h at can b e d rawn th ro u g h m ic ro s u p p o rt a n d res i sta n c e of t h e
h i g h s a n d l ows of m any p ri ce swi n g s created th ro u g h o ut t h e
trad i n g s e s s i o n .

Yo u m i g ht co n s i d e r b uyi n g b o u n c e s off p ri o r i ntra d ay m i c ro

s u p p o rt o r s h o rti n g off of i ntrad ay m icro res i stan ce .

N ow l et's co n s i d e r a n ot h e r typ e o f d i recti o n al m ove - an i n itial

stro n g wave u p o r d ow n . Trem e n d o u s b uy i n g o r s e l l i n g e nters
a stock d rivi n g it s i g n i fi cantly u p or d ow n i n p ri ce . Th e
exam p l e b e l ow s h ows the b uye rs i n fi r m contro l fo r t h e i n itial
p ri ce wave u p .
U s u a l l y th e s peed a n d m ag n i tu d e of th e s e waves w i l l retrace as
s h own above . O ccas i o n a l ly, th e i n it i a l stro n g p ri ce wave w i l l
h o l d its ow n a n d n ot retrace th e m ove . I n stead , t h e stock w i l l
trad e i n a n arrow, t i g h t ran g e u p n ear the h i g h of a n u p m ove
o r d own ag ai n st the l ow of a s h arp s e l l off.

W h e n a stock m oves i n th i s fas h i o n as s h ow n b e l ow , it s h ows

t h at the b u yers o f th e i n it i a l wave are re m ai n i n g i n contro l by
n ot al l ow i n g the s e l l ers to p u s h the stock b ack d ow n . Be ready
fo r an oth e r stro n g wave u p as any i n i t i a l p rofit tak e rs a n d
s h o rt s e l l e rs h ave b e e n s h ak e n o ut with o ut a s i g n i fi ca n t d i p i n
p ri ce . A b reakout to n ew h i g h s w i l l often b e a n ot h e r stro n g
a n d q u i c k p ri ce wave u p .
A n oth e r p o s s i b l e o utco m e of th e p atter n j u s t covered i s
d iag ram m e d b e l ow. Th e i n i t i a l wave u p i s fol lowed by
p e rs i ste nt b uy i n g strength th at is g ra p h ica l ly refl ected on t h e
c h art. Th i s stre n gth i s s e e n i n t h e n atu re of t h e t i g ht s i d eways
trad i n g t h at kee p s t h e stock n e a r t h e h i g h of t h e u p wave . If
t h e stock s p e n d s a w h i le i n t h i s trad i n g ran g e witho ut b re ak i n g
o ut convi n c i n g ly w i t h a s p i ke u p to n ew h i g h s , l o o k fo r a
cap itu l at i o n of th e b uyers .

If a n d w h e n th e stock b eg i n s to b reak d ow n , a s h arp s e l l off

often e n s u e s as t h e " l o n g s" s e l l o ut to tak e t he i r p rofits o r
l o s s e s a n d oth e r trad e rs e nter t h e stock s h o rt s en s i n g t h e
stock ' s weak n e s s . Th ese are t h e p l aye rs a n d t h e d y n a m i c s of
th i s p arti c u l a r typ e of p ri ce wave th at retraces t h e i n iti a l m ove
up.

I n g e n e ra l , the fu rth e r a n d faste r a s tock m oves i n p ri ce an d

ti m e i n o n e d i rect i o n (a p ri ce wave u p o r d ow n ) , t h e m o re l i kely
it wi l l react stro n g ly b ack i n t h e oth e r d i rect i o n w h e n t h e m ove
stal l s a n d b e g i n s to rever s e .
Co n s i d e r a stock t h at u s ua l l y trad e s i n a ran g e o f th ree p o i nts
d u ri n g any o n e d ay. If t h at stock ru n s up 2 1 / 2 p o i nts w i t h i n
2 0 m i n utes , i t i s m o re l i ke l y to reve rse b ack d ow n q u i ck l y.
Th i s reve rsal i s often fas t a n d d ra m at i c as i t retraces a
s i g n i fi cant p o rt i o n of t h e i n itial u p m ove . T h e converse wo u l d
p l ay i ts e l f o u t fo r a q u i c k , ste e p s e l l off. I n t h i s cas e t h e stock
is m o re l i ke l y to h ave a q u i c k and m o re v i o l e n t b o u nce (p r i ce
wave) b ack u p .

If that sam e stock s p e n t several h o u rs stead i ly g ri n d i n g i ts way

u p 2 1 / 2 p o i nts , t h e n a n y e n s u i n g s e l l - off wi l l take m o re ti m e
a n d m ove m o re s l owly o n ave rag e . Th e c h a racte r ( s peed a n d
m ag n itu d e) of t h e s e p ri ce w aves are b e st s e e n o n a s - m i n ute
bar c h art w h i c h p rovi d e s a n i ce p i ctu re a n d i s an easy way to
track a stoc k ' s m ove m e n ts i n real -ti m e .

Price wave s a s s e e n o n a 5 - m i n ute b a r c h art refl ect w h o i s i n

control (b u ye rs o r s e l l ers) as we l l as h ow stro n g a n d co n t i n u al
the i n fl u e n ce th ey e x e rt. N ow , h ow do you ap p ly th i s
i n fo r m at i o n i n yo u r ow n d ay trad i n g?

Aware n e s s of the typ i cal p atte r n s we 've cove red p re p ares you
to react to the l i ke l y o u tco m e s and p ote n t i a l l y e nter a trad e o r
e x i t a n ex i st i n g p o s i ti o n . Read i n g a d es c r i pti o n o f p ri ce waves
h e l p s . But we n eed to g et c l o s e r to the real wo r l d of trad i n g
with a l l o f th e n itty- g r i tty s u bt l et i e s a n d n u an c e s of h ow to u se
p r i ce waves to g u i d e o u r trad i n g . T h at m e a n s vi ewi n g act u a l
ch art exam p l es with p l e n ty of a n n otati o n s d e s c ri b i n g al l of the
d etai l s in th e t r u e co n text of trad i n g .
As yo u scruti n i z e th e fo l l owi n g c ha rts , yo u w i l l g et a b ette r
i d ea fo r g au g i n g w h e n a n d w h e re to e n te r a p ote n t i a l trad e .
B u t m o re i m po rtantly, you w i l l b e g i n t o see a n d u n d e rsta n d
wh e re t h e h i g h e r r i s k areas l i e . Th e s e are th e p l aces o n t h e
ch art w h e re p ro b a b i l i ty d i ctate s t h at i t i s too r i s ky to e nter a
trad e i n the c u rre n t d i rect i o n of t h e sto c k ' s m ove . So m e of
t h e s e r i s ky areas m ay act u a l l y be g ood p o i nts on t h e c h art to
e n te r a trad e i n th e o p p o s ite d i recti o n of t h e i n it i a l p ri ce wave.

So let's g o ah ead and l oo k at s o m e actual c h art exam p l e s . I

h ave a n n otated th e m i n as m u c h d etai l as p o s s i b l e to ad d re s s
s p ecifi c trad i n g d ec i s i o n s a n d t o h e l p i n teg rate p ri ce wave
aware n e s s i n to yo u r an alys i s . I n ad d i ti o n , m i cro s u p po rt a n d
re s i stance z o n e s w i l l b e p o i n ted o u t a n d h ow p ri ce waves
i n te ract with th e m to i m p act d ay trad i n g c h o i ce s .
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Pay c l o s e atte n t i o n to the d i recti o n of th e stock i n d i ce s . Th e
i n d ex of w h i ch t h at stock i s a co m p o n e n t w i l l h e l p p ro p e l t h e
stoc k ' s m ove m e n t, e s p ec i a l l y w h e n they both are m ov i n g i n
the s a m e d i recti o n , w h et h e r i t b e fo r a few m i n ute s o r fo r
seve ral h o u rs . The i n d ex w i l l i m p act the s peed a n d m ag n it u d e
o f th e stoc k ' s p ri ce wave s .

Th i s s ecti o n o n p ri ce waves i s n ot i n te n d ed to e n co u rage yo u

to atte m pt p i ck i n g to p s a n d b otto m s of p ri ce swi n g s to trad e .
Alth o u g h s o m e good cou n te r m ove trad e s c a n b e i so l ated ,
d o n 't go ove rboard w i t h it. Th e p ri m ary i m po rtan c e i n
k n ow i n g t h e n atu re o f p ri ce waves i s t h at i t a i d s yo u r
asse s s m ent of r i s k a n d pote ntial reward fo r a d ay trad e . Th i s
i n c l u d e s both trad e e n try areas a s we l l a s e x i t areas w h e n
eva l u ati n g t h e i n d ex a n d stock c h arts .
FA D E T RA D I N G M I C RO
S U P P-O RT j R ES I STA N C E
 FADE TRADING M ICRO SU PPORT I RESISTANCE

Fad e trad i n g , a l s o refe rred to as co u nte r tre n d trad i n g , s i m p ly

m ea n s yo u are e n te r i n g a stock i n t h e o p p o s i te d i rect i o n t h at i t
h as c u rre n tly b e e n m ov i n g . If a stock ral l i e s u p i n p ri c e , yo u
are e s s e n ti al l y i s o l ati n g a g ood p l ace to e n t e r i t s h o rt w i t h t h e
as s u m pti o n that the stock i s reve rs i n g i t s d i recti o n w i t h
e n o u g h fo l l ow th ro u g h t o p rovi d e a d ecent d ay trad i n g p rofit.

You are effectively atte m pti n g to p i ck to p s a n d b otto m s i n

i n trad ay p ri ce m oves both u p a n d d ow n . J u st ran d o m ly
atte m pti n g to s h o rt s e l l a stock d u ri n g a m ove u p o r b u yi n g a
stock th at i s s e l l i n g off can b e l i ke d a n c i n g with t h e d evi l . I n
e s s e n ce , yo u are fi g hti n g th e d i recti o n o f "the tape . " Y o u r i s k
s o m u ch fo r s o l i ttle u n l e s s s o m e m ethod can p o i nt th e way to
pote ntial h alti n g p o i nts th at can b e q u antifi e d i n s o m e
m an n e r.

Let 's try to take th e d evi l out of th e trad i n g eq u at i o n by

avo i d i n g RA N D O M atte m pts to g u e s s to p s a n d b otto m s of a
stock ' s trad i n g acti o n . By k n owi n g the n atu re of " p ri ce wave s"
and at ti m e s i n co r p o rati n g r e l ative stre n g th , we can g o to the
5 - m i n u te bar c h art and also i d e n t i fy s o m e key m i cro s u p p o rt
a n d re s i stance areas . T h e s e areas ofte n h al t a n d reve rse the
stock's c u rre n t m ove up o r d ow n .

W h e n we see a stock n eari n g m i cro s u p p o rt o r res i stance o n

t h e 5 - m i n u te c h a rt , w e c a n p re pare fo r a p ote ntial cou n te r
tre n d trad e with a re l ative l y q u an t i fi ab l e e n try p o i nt. W h e n
"fad i n g " w e m u st fi n d an e n t ry p ri ce t h at p rovi d e s l ower r i s k
a n d h i g h e r p ro b ab i l i ty o f s u cces s t h a n g ut-fe e l , ra n d o m top
and b otto m p i c k i n g .

So, w h at i s m i cro s u p p o rt a n d res i sta n ce o n the 5 - m i n ute b a r

ch art, and h ow d o w e recog n i ze i t , a n t i d p ate i t a n d c h oose th e
best e ntry p o i n t? A l s o , h ow d o we i n co r p o rate p ri ce waves a n d
re l ative stre n gth i nto th e an alys i s?

F i rst l et's d eal w i t h m i cro s u p p o rt a n d re s i stan ce. You w i l l

want to fo l l ow a 5 - m i n ute bar c h art d i s p l ay i n g two to th ree
d ays of d ata. Loo k b ack at th e p l aces w h e re u pward p rice
swi n g s to p p ed o u t a n d w h e re d ownward m oves h ad s i g n i fi c a n t
b o u nces that reve rsed the stoc k ' s m ove . If you m e n tal ly d raw
a h o ri zo ntal l i n e acro s s th e to p of u p swi n g s ( m i cro res i stan ce)
a n d ac ro s s t h e b otto m of d ow n swi n g s (m i cro s u p po rt) , yo u
h ave fo u n d a n area t h at m ay p ote n t i a l l y h al t th e stock ' s m ove
d u r i n g th e c u rre n t trad i n g s e s s i o n .

I f a stock ru n s u p to m i c ro res i stance a n d ap pears to stal l a n d

b eg i n to reve rse d ow nward , y o u h ave a s pe c i fi c area to s h o rt
s e l l t h at stock . B u t l et ' s not trad e th i s tech n i q u e i n a vacu u m .
Of p r i m ary i m p o rtance i s th e i n d ex d i recti o n . It M UST b e
m ovi n g d ow n o n its 5 - m i n ute c h art t o i n creas e th e p ro b a b i l i ty
of th i s s h o rt trad e ' s s u cce s s .

A l s o co n s i d e r h ow far a n d fast t h e u pward p rice wave p l ayed

o ut. The fu rth e r a n d faster it u n fo l d ed , th e b ette r th e c h ances
are of a h ard e r reve rsal in t h e stock . In ad d i ti o n , re l ative
stre n gth can s o m eti m es b e u ti l i ze d i n stead . If th e m arket
i n d ex h as j u st u n d e rg o n e a stro n g ral l y i n the l ast 30 m i n utes
o r h o u r and th e stock h as o n l y m oved u p s l i g h t l y as it m eets a
m i cro res i stan ce area, t h e n i f t h e i n d ex reve rses d i recti o n the
stock s h o u l d typ i cal ly b eg i n a s e l l o ff.

Th i s i s h ow both p ri ce waves a n d re l ative stre n gt h can h ave an

ad d i tive effect to h e l p " c h e rry p i c k" t h e b e s t m i c ro s u p po rt a n d
re s i stance fad e trad es . An d , a s m e n t i o n e d a m o m e n t ag o ,
m ake s u re t h at yo u are e nte ri n g t h e stock i n t h e d i recti o n of
its corres po n d i n g m arket i n d ex . Th e i n d e x p aves the way to
p rofi ts i n i n d ivi d u a l stock d ay trad e s n o m atte r w h at criteria
yo u e m p l oy fo r yo u r trad i n g tech n i q u e s .

I wo u l d a l s o l i ke to p o i n t o u t th e s i g n i ficance o f th e p ast two

d ay ' s h i g h s a n d l ows , th e p ri o r d ay ' s c l o s e a n d the c u rrent
s e s s i o n s o pe n . Th ey al l can act as m i cro s u p po rt and
re s i stance p rices . These m i c ro zones often offe r eve n m o re
p ote n t p ri ce reversal areas , es peci al ly the p ri o r d ays h i g h a n d
l ow. Yo u r co n sta n t aware n e s s o f t h e s e p o i n ts o n th e ch art can
s i g n i fi cantly i m p act yo u r s u cce s s with fad e trad e s .

Agai n , l et's l o o k at s o m e c h arts to s e e h ow t o act u al l y

i n co rporate m i cro s u p p o rt a n d res i stan ce i nto yo u r trad i n g a s
co u nte r tre n d tec h n i q u e s .
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P I N G PO N G P LAYS
 PING PONG PLAYS

O n t h e 5 - m i n ute bar c h art , yo u w i l l n oti ce t h at m o re o fte n

t h a n not, stocks trad e u p a n d d ow n i n e i th e r a s i d eway s ,
co n g ested m an n e r o r w"ith a very s l i g h t u pward o r d ownwa rd
b i as . If th e i n d i c e s are a l s o c h o p py, th i s u p a n d d ow n , b ac k
a n d fo rth p ri ce b e h av i o r i s eve n m o re p reva l e nt. Eve n t h o u g h
stro n g ly, i n trad ay tre n d i n g m arkets offe r s o m e o f th e b e s t
p rofit pote n t i a l , t h e s e ran g e - b o u n d d ays o ut n u m b e r t h e
tre n d i n g d ay s .

A s a d ay trad e r you m ay w i s h t o avo i d trad i n g t h i s typ e of

m arket s e s s i o n altogeth e r - eas i e r s a i d than d o n e . If you
c h oose to ventu re i n to s u c h a m arket, do s o j u d i ci o u s ly. Th i n k
of th e n at u re of the p rice wave s w h e re each u p m ove a n d d ow n
m ove i s rap i d ly h alted a n d reve rsed . Qu i c k p rofit tak i n g with a
l ow to l e ra n ce fo r r i s k o n l o s i n g trad e s l ead s to th e b est c h a n ce
of a p rofitab l e d ay .

Li ke a p i n g p o n g b a l l b o u n c i n g back a n d fo rth , th e stock s

b o u nce b ack a n d fo rth with l i ttl e d i recti o n a l fo l l ow th ro u g h .
B reak o u t trad i n g can l e ad to d i s aste r, b ut s cal p i n g th e s m al l e r
swi n g s , the p i n g p o n g b o u n ce s b ac k a n d fo rth , p re s e n ts b ette r
od d s fo r s u cces s fu l d ay trad e s . So h ow d o we p l ay p i n g p o n g
w i t h t h e m arket?

U n d e r these ran g e- b o u n d trad i n g co n d i ti o n s co n s i d e r al i g n i n g

yo u rs e l f with the l aws of p ro b ab i l i ty. W h e n a stock ral l i es i n
p ri ce , s h o rt offer s h ares i nto t h e ral ly as i t ap pears to b e g i n
r u n n i n g o u t o f steam . I f yo u are fi l l ed , wait fo r th e anti c i p ated
reve rsal i n d i recti o n , a n d b i d out of yo u r s h ares at a l ower
p ri ce o n ce the stock works its way b ack d ow n .

Pay atte n t i o n to th e e b b a n d fl ow of p ri ce o n b oth th e 5 -

m i n u te bar c h art as we l l as th e c h aracte r of th e l evel I I q u ote
scree n . Th e m ove m e n t of the l evel I I s cree n a l o n g w i t h th e
" p ri nts" o n th e ti m e a n d s a l e s w i n d ow h e l p to g u i d e yo u to t h e
h alti n g areas of t h e s e s m al l e r , i ntrad ay p ri ce swi n g s . A l s o ,
watch th e i n d ex a n d m a ke s u re t h at i t s m ove i s stal l i n g too
befo re ente r i n g a co u nter-tre n d , p i n g p o n g trad e i n a stock.

Keep yo u r risk p ara m eters ti g h t. A stock s e l l s d ow n and

yo u 've bid i n to a long p o s i t i o n at w h at see m ed to b e th e ti m e
fo r a b o u n ce b ack u p i n p ri c e . I f th e b o u nce d o e s n ot e n s u e
with i n a few seco n d s to a few m i n u tes , a n d th e l evel I I q u ote
scree n and p ri nts s h ow a n oth e r wave of s e l l e rs h itti n g the
stoc k , th e n q u i c k l y s e l l o u t to e x i t t h e p o s i t i o n with a s m a l l
loss.

Co n s i d e r i n g yo u r co m m i s s i o n structu re a n d h ow yo u r
b roke rage fi r m c h arg e s yo u fo r each trad e executi o n , a l e s s
r i s ky way to p i n g p o n g a stock re l i e s o n s cal i n g i nto th e e n t ry
of th e trad e . I n a way , you are cost ave rag i n g o n a m i cro scale
by e i g h th s a n d q u arte rs ofa p o i nt.

For exam p l e , a stock beg i n s to s e l l off fro m th e p ri ce of 5 0 .

Yo u b i d i n to 3 0 0 s h ares at 4 9 1 / 2 a n d a n oth e r 3 00 s h ares at
4 9 1 / 4 a n d fi n al l y 3 0 0 s h ares at 4 9 1 / 8 w h ere th e stock s h ows
stro n g s i g n s of a n e n s u i n g b o u n c e . Sca l i n g i nto th i s l o n g
trad e with t h ree e n t r i e s al l took p l ace with i n j u st a few m i n u te s
a n d g ave you an ave rag e e ntry p rice o f ap p rox i m ate l y $ 4 9 . 2 9
o n yo u r 900 s h are p o s i ti o n .

A s the stock b o u n ces a n d r u n s back u p you are a b l e to o ffe r

yo u r 900 s h ares o u t at 4 9 7 / 8 a n d g et fi l l e d fo r a p rofit of j u st
a tad ove r 1 / 2 p o i n t . Th i s eq u ate s to ro u g h ly $ 5 2 5 befo re any
com m i s s i o n s and fee s . N ot too b ad if i t works o ut. If t h e
stock w e n t i nto a m e ltd ow n afte r yo u e n te re d yo u r fi n al 3 00
s h ares at 4 9 1 / 8 you wo u l d atte m pt to s e l l o u t at 4 9 i n c u rri n g
a $ 2 6 0 l o s s befo re com m i s s i o n s a n d fee s .

Obvi o u s ly, t h e k ey i s to b e r i g h t at l e ast 5 0% of th e ti m e

(de p e n d i n g u p o n yo u r ove r h ead - i . e . co m m i s s i o n s) . B u t i n a
c h o p py , ra n g e - b o u n d m arket, you are p utti n g t h e o d d s i n yo u r
favo r by reacti n g to a n d a l i g n i n g yo u r trad i n g w i t h th e
m arket' s c u rre n t c h a racter of p ri ce m ove m e nt.

What i s th e advantage of scal i n g i nto a p o s i t i o n as d e s c r i b e d

above vers u s tak i n g an outri g h t l o n g p o s i t i o n o f 900 s h ares at
o n e s pecifi c p ri ce t h at yo u p e rceive d to be th e b otto m of the
stoc k ' s m ove d own? You are s i m p ly l i m iti n g yo u r d ow n s i d e
r i s k . It i s e as i e r to p i c k a ran g e o f p ri ce a s th e botto m t h at you
scale i nto rath e r than p i ck a n exact p ri ce at w h i c h t h e stock
wi l l h alt and reve rse . I n ad d iti o n , when yo u are w ro n g and th e
stock d oe s i n fact s e l l off h ard , yo u m ay o n ly h ave 3 0 0 o r 600
s h ares to d u m p q u i c k l y fo r a s m al l e r l o s s .
H o p efu l ly , a l o n g trad e (as i n th i s e x a m p l e) fol l owed th ro u g h
fo r the a n ti c i p ated p rofit. I n s tead o f j u st offe ri n g o r s e l l i n g o u t
o f yo u r 900 s h are p o s i ti o n , yo u m ay want t o g et s h o rt fo r t h e
n ext swi n g b ac k d ow n . Yo u m i g h t offe r m o re t h a n j u st 9 0 0
s h ares w h i l e b oo k i n g p rofits , as yo u b eg i n scal i n g i nto a s ho rt
p o s i t i o n by s h o rt offe r i n g 1 2 0 0 o r 1 3 00 s h ares p utti n g yo u
s h o rt e i t h e r 3 00 o r 4 0 0 s h ares i f fi l l e d (as yo u 've c l o se d o u t
yo u r 900 l o n g s h are s ) .

A m o re ag g re s s i ve ap p roach i s avai l ab l e . If yo u r a n alys i s tel l s

yo u th at th e to p of th e p ri ce wave h as b e e n reac h ed , s h o rt
offe r o r s h o rt s e l l 1 900 s h are s . I n t h i s case you 've cove red
yo u r l o n g p o s i t i o n of 900 s h ares a n d are n ow s h o rt 1 000
s h ares as s u m i n g yo u r e nti re o rd e r was fi l l e d .

Be ve ry carefu l with th e p i n g p o n g tech n i q u e . U s e com m o n

se n s e , a n d d o n 't g o b o n k e rs b y g etti n g h u n g u p o n o n e stock
a n d ove r trad i n g by g o i n g l o n g , t h e n s h o rt , th e n l o n g , t h e n
s h o rt . . . i f you keep tak i n g a l o s s ! T h e p i n g p o n g trad e i nvolves
both fi n e s se and k n ow l e d g e of th e p e r s o n a l i ty o f s to c k s you
are trad i n g . Th i s is acco m p l i s h e d b y h av i n g fo l l owed a
" b as ket" of s tock s o n th e i r 5 - m i n ute c h a rt a n d l eve l I I q u ote
s c re e n d ay i n a n d d ay o u t ove r ti m e .

P i n g p o n g trad e s are a l l a b o u t fo l l owi n g the b o u n c i n g b a l l b y

reacti n g t o w h at the m ar ket i n d ex a n d i n d iv i d ua l stock s a r e
te l l i n g yo u th ro u g h th e l a n g u ag e of th e 5 - m i n ute b ar c h a rt
a n d l evel I I q u otes . Loo k to th e 5 - m i n ute bar c h a rt of t h e
i n d ex to h e l p p o i n t th e way a n d t i m e yo u r e n t r i e s a n d ex i ts .
As alway s , b o o k p rofits i n p i n g p o n g trad e s q u i c k l y ; take yo u r
l o s se s eve n m o re q u i ck ly.

I fi n d i t d iffi c u lt to convey th e n u an ce s of t h e p i n g po n g effect

with c h arts a l o n e . Yo u can n ot l eave o u t th e d y n a m i c , real ti m e
l evel I I q u otes com b i n ed with a n alys i s o f th e 5 - m i n ute c h art of
a stock. U n fo l d i n g at t h e s a m e ti m e fro m m o m e n t-to - m o m e n t
i s t h e i n d ex d i rect i o n a n d t h e stoc k ' s trad e s fl ow i n g t h ro u g h
the ti m e a n d s a l e s w i n d ow.

For p i n g pong p l ay s , i t o n ly tak e s s o m e real ti m e o b s e rvati o n

o f th e q u otes a n d p ri n ts d u ri n g m arket h o u rs to g et a b ette r
s e n s e fo r h ow a l l of t h e s e com p o n e n ts al i g n tog eth e r . With
ex p e ri e nce you w i l l s e n s e and i s o l ate th e best e ntry p o i nts (or
areas) fo r these d ay trad e s .

Th e fo l l owi n g d i ag ram w i l l g ive yo u s o m e s e n se o f h ow th e

stock m i g h t m ove as yo u e n te r a n d e x i t a p o s i ti o n . Each b a r i n
th i s exam p l e w i l l re p re s e n t o n e m i n ute of trad i n g activity.
We ' l l look at a l o n g p l ay off of a p ri o r i n trad ay swi n g l ow t h at
s h o u l d p rovi d e m i cro s u p po rt fo r a b o u n c e .

O N E M I N UTE C H ART
51
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T RA D I N G N EW I NT RA DAY
H I G H S & LOWS
 T RADING NEW INTRADAY HIGHS & LOWS

E n te ri n g a l o n g trad e as a stock p e n etrate s its c u rre n t h i g h o n

th e s e s s i o n o r s h o rti n g a stock a s i t fal l s t h ro u g h i ts l ow can
b e a very effective s trategy for d ay t rad e r s . F i rst, the stock i s
s h ow i n g a d efi n i te d i rect i o n b y tak i n g o u t its h i g h o r l ow of th e
d ay. Seco n d , o n tre n d i n g d ay s , t h e s e " b reakout" t rad e s ofte n
l e ad to m U l ti - po i n t m oves i n i n d iv i d u al stocks .

I n d i sc ri m i n ately b uy i n g stock s b reak i n g n ew h i g h s a n d

s h o rti n g n ew l ows i s a s i m p l e b ut rec k l e s s trad i n g strategy.
M o re i nte n se scruti ny (by o b s e rv i n g th e 5 - m i n ute bar c h art)
reve a l s s o m e i m p o rtant req u i re m e n ts t h at m u st b e fu l fi l l e d to
s i g n i fi cantly i n crease the o d d s of a s u cces s fu l trad e .

Two p ri m ary facto rs act to g u i d e yo u t o th e b e st p ote n tial

b reakout trad e s , both l o n g a n d s h o rt. Either one of t h e s e
s h o u l d b e p re s e n t fo r yo u t o con s i d e r e nte ri n g a b reakout
trad e in a stock . Loo k fo r one o r b ot h of the fo l l owi n g :

1 ) C o n so l i d at i o n at t h e h i g h o r l ow
2 ) Re l ative stre n gth i n yo u r favo r

1 ) The fi rst p rereq u i s ite (l i sted above) i s fo r th e stock to

con s o l i d ate , o r conti n u al l y p re s s ag ai n st the c u rre n t d ay ' s h i g h
o r l ow fo r s everal 5 - m i n u te bars b efo re b re ak i n g o u t . Th i s
s h ows stre n g th i f p res s i n g agai n st t h e i n trad ay h i g h a n d
weak n e s s i f p re s s i n g ag ai n st th e l ow. I h ave j u st d es c r i bed t h e
c l as s i c con s o l i d at i o n b reakout u s i n g t h e 5 - m i n ute c h art.

For a n ew h i g h trad e , the i m po rtance of co n s o l i d at i o n is th at it

s h ows b uyers are sti l l i n co n t ro l . T h ey w i l l n ot l et th e stock
re act b ack d ow n o n ce th e stock h as r u n u p to i ts h i g h . The
converse is true fo r a s h o rt s et u p c o n s o l i d ati n g at t h e l ow of
the s e s s i o n . Th i s is th e c l as s i c "co n so l i d at i o n b reakout" trad e
covered exte n s ive ly i n m y b oo k ''Stock Patterns for Day
Trading. II

We wi l l cover th i s s etu p i n d etai l w i t h actu al c h a rts i n a

m o m e n t. Th ese e x a m p l e s w i l l a l s o s h'ow m o re c u rre n t
a p p e arances of co n so l i d at i o n with n ewer variati o n s o n the
s pecifi c s of t h i s p owe rfu l s et u p u p d ated to fi t tod ay ' s m arket
ch aracte r.

2) The seco n d facto r t h at m i g h t p re s e n t i t s e l f i nvo lves re l ative

stre n gth - th e stre n gth o r weak n e s s of th e stock r e l ative to its
i n d ex wh e n co m p ared on th e 5 - m i n u te bar c h art. We cove red
re l ative stre n gth earl i e r , b ut l e t ' s i n teg rate i t i nto stock s
b reak i n g o u t t o n ew h i g h s o r l ows .

H e re i s an exa m p l e . A stock m oves u p to set a h i g h of 5 0 o n

t h e s e s s i o n d u ri n g t h e fi rst h o u r o f trad i n g . I t s h ows stro n g e r
u p waves t h a n d ow n waves w i t h h i g h e r i ntrad ay l ows o n t h e 5 -
m i n ute c h art. Th e stock i s c u rrently trad i n g s o m ew h e re n e ar
th e h i g h (4 9 3 / 4 to 5 0 ) . Th e i n d ex h as s o l d off s o m ew h at
d u ri n g that fi rst h o u r, b ut reve r s e s i ts d i recti o n a n d b eg i n s to
ral ly l o n g .
Th i s m ay b e t h e co n fi rm at i o n yo u a re l oo k i n g fo r i f th e stock i s
h i t by a wave of b uyers. B uy i n g i nto t h i s b reak o u t h as a bette r
c h a n ce of s u cce s s with re l ative stre n g t h o n yo u r s i d e . Th e
s a m e p h e n o m e n o n p l ays o u t w i t h a weak stock at o r n ear i ts
l ow d u ri n g th e s e s s i o n with a ral l y i n its co rres p o n d i n g i n d e x .
I f th e i n d ex ro l l s ove r a n d b eg i n s to s e l l off, t h e re l ative
weak n e s s of the stock com b i n e d w i th the fact t h at it h as
sag ged d ow n to its l ow of the s e s s i o n w i l l l i ke l y l e ad to a good
s h o rt trad e.

I b e l i eve t h at re l ative stre n gth o r weak n e s s i m p acts m y trad i n g

d eci s i o n s m o re t h a n any oth e r vari a b l e as I e m p l oy m y t rad i n g
tec h n i q u e s th ro u g h c h art an alys i s . A l th o u g h re l ative stre n gth
and weak n es s can b e trad ed as a stan d - a l o n e strategy, i t
beco m e s eve n m o re p owe rfu l w h e n pai red with t h e i nt rad ay
b reako u ts of stocks th ro u g h o u t t h e trad i n g d ay.

In any b reakout trad e with one o r b oth of these two e n h a n c i n g

facto rs, n ever fo rg et to tak e trad e s o n ly i n th e d i recti o n o f the
m arket i n d ex to m ax i m i z e th e od d s of a s u cces s fu l d ay trad e .
Th ese b reakouts c a n b e s cal p e d fo r a q u i ck p rofi t, o r yo u m ay
w i s h to r i d e t h e m o u t fo r l arg e r p rofits . I n e i t h e r cas e , m ake
s u re yo u m an age yo u r r i s k by n ot tak i n g a b i g l o s s .

J u st d escri b i n g th e b reako ut trad e a n d t h e two i nfl u e n c i n g

co m po n e n ts o n l y g ives yo u a vag u e s e n s e o f w h at th ey actual l y
look l i ke a n d h ow t o trad e th e m . Let ' s g o t o th e c h a rts a n d
see h ow th ey l oo k i n the r e a l wo r l d of trad i n g . Eve n th o u g h
the exam p l e s are static p ictu res o f b reako u t trad i n g , yo u wi l l
b e bette r eq u i p p ed w h e n yo u watch t h e s e trad e s u n fo l d i n real
ti m e . With s o m e e x p e r i e n c e , yo u s h o u l d b e a b l e to i d e n tify
a n d trad e t h e s e b reakout s etu p s m o re effectively.
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M any of the c u rre n t software trad i n g p rog ram s i n c l u d e a
"ticker" fo r stock s m ak i n g n ew h i g h s o r l ows o n the trad i n g
s es s i o n . Th e stock sym b o l s stream th ro u g h i n real ti m e j u st as
they m ake a n ew h i g h or l ow . T h e s e ti ckers can b e coded to
d i s p l ay o n e co l o r fo r n ew h i g h s a n d a n ot h e r co l o r fo r n ew
l ows . Th i s m akes i t eas i e r fo r t h e trad e r to k n ow , at a g l an ce ,
w h i c h stocks m ay b e o f i nte rest fo r b reako u t trad e s .

Yo u r n ew h i g h / l ow ticker can b e p e rs o n a l ized , to track a bas ket

of stocks that yo u c h oose to fo l l ow d u ri n g t h e d ay . Track as
m any o r as few stocks as yo u w i s h . I m o n i to r my n ew
h i g h / l ow ticker constantly th ro u g h o u t each t rad i n g s e s s i o n .
M any q u al ity trad e s can b e i n stantly b ro u g h t to yo u r atte n t i o n
w i t h t h i s too l .

H e re i s an exa m p l e of w h at a n ew h i g h / l ow t i c k e r l o o k s l i k e :
PLAY I N G STO C K S ECTO RS
 PLAYING STOCK SECTORS

Stocks can b e g ro u ped i n to d iffe re n t m arket secto rs . I n e ac h

secto r t h e re w i l l b e s everal stocks t h at te n d t o m ove tog eth e r
d u ri n g t h e d ay i n t h e s a m e d i recti o n , u p o r d ow n . A few
exam p l es of s ecto rs a re s e m i - co n d u cto r stock s , b i otec h s , a n d
i nternet stoc k s .

I n stituti o n a l m o n ey te n d s to rotate i n to a n d o u t of d i ffe re n t

secto rs ove r ti m e . T h i s i s th e m o n ey t h at ofte n co ntro l s t h e
d i rect i o n o f a s ecto r th ro u g h o u t a t rad i n g s e s s i o n . By
recog n i z i n g t h at stocks i n a p arti c u l ar secto r are b e i n g b o u g ht
o r s o l d , you can cap i ta l i z e o n t h e s e i n trad ay m oves as a d ay
trad e r .

A fri e n d of m i n e cal l s th i s the "easy m o n ey." You s i m p ly watch

fo r stoc k s i n a s ecto r to co l l ectively s h ow stre n gth or weak n e s s
a s t h e m arket u n fo l d s . Eac h stock i n a s ecto r d o e s n ot
n ece s s ari ly m ove at o n ce . You can see two o r t h ree b e g i n to
m ove tog et h e r a n d e n te r a trad e i n the d i recti o n of t h e m ove .
M o re i m po rtantly, yo u can catch o n e of t h e stock s i n t h at s a m e
secto r t h at h as not tak e n off yet.

The u n d e rlyi n g stre n gth or weak n e s s i n a s ecto r h e l p s yo u fi n d

a n d co nfi d e ntly h o l d o nto t h at s ecto r ' s i n d ivi d u al stock s
(wh eth e r l o n g o r s h o rt) s i n ce t h ey u s u a l ly m ove as a g ro u p .
Watch fo r secto r trad e s a s s o o n a s t h e m arket o p e n s an d track
th e m th ro u g h o u t t h e trad i n g s e s s i o n .
So , h ow d o yo u k n ow wh i c h s tock s a re i n each s e cto r a n d
w h i ch o n es that te n d to m ove tog eth e r? A n um b e r of software
p rog ra m s are ava i l ab l e t h at g ro u p s tocks i nto s ecto rs fo r yo u .
A l s o , m any i nter n et w e b s i te s for trad e r s p rovi d e a l i st of k ey
secto rs a n d th e acco m pa n yi n g s toc ks . If you h ave acces s to a
B l oom b e rg te r m i n a l , stock s ecto rs can b e g e n e rate d s h owi n g
t h e co m p o n e n t stocks ran ke d b y m arket cap i ta l i z ati o n .

O n ce you h ave yo u r l i st of stock s w i th i n each secto r, s it d ow n

a n d v i ew th e i r d a i ly a n d i ntrad ay 5 - m i n u te c h arts . Loo k fo r
those stocks t h at te n d to m ove tog et h e r with i n each secto r.
G et to k n ow th e m . N ow you are ready to secto r trad e .

I k n ow th i s so u n d s s i m p l e . B u t i f y o u tu n e yo u rs e l f i n to
" s ecto r-aware n e s s , " yo u h ave th e b i g m o n ey o n yo u r s i d e t h at
ofte n d rives t h e stocks t h ro u g h o u t the d ay. If yo u see two
stocks i n a s ecto r beg i n s e l l i n g off h ard , you k n ow th e oth e r
two , th ree o r fo u r t h at are a b o u t to fo l l ow s u i t. Th i s g ives you
a n o p p o rtu n i ty to g et s h o rt at th e b eg i n n i n g of th e i r p ri ce
m ove .
F I N D I N G T H ES E T RA D E
S ETU PS I N
R EA L T I M E
 FINDING THES E T RADE SETU PS IN REAL TIM E

So , h ow d o you fi n d th e trad e s et u p s cove red i n t h i s m an u al

with t h o u s an d s o f stocks o u t t h e re? F i rst, c h oo s e a l i st of
stocks to fo l l ow o n a reg u l ar bas i s i n rea l ti m e . Th i s l i st co u l d
be 3 0 sto c k s , 1 0 0 stoc k s , 3 0 0 stock s o r m o re . It i s u p to yo u .

Fo l l ow t h e s e stocks o n a t i c k e r th at s h ows the c h a n g es i n b i d s

a n d a s k s fo r m arket m ak e rs a n d EC N ' s . A s th e stock sym b o l s
scro l l b y i n real ti m e , typ e i n each stock sym bo l a n d l o o k at its
d a i ly ch art, 5 - m i n ute c h a rt, l eve l II q u ote w i n d ow and ti m e a n d
s a l e s wi n d ow. Watch th e trad i n g activity a n d c h art p atte r n s a s
they u n fo l d .

By con stantly cycl i n g th ro u g h yo u r b as ket o f stock s a s th ey

fl ow acro s s yo u r t i c k e r , you g et a b ette r s e n s e of h ow t h e s e
stocks a r e trad i n g th ro u g h o u t t h e s e s s i o n . Afte r read i n g t h e
strate g i es a n d stu dyi n g the c h arts i n th i s m an u al , you wi l l h ave
a s e n s e of w h at to l o o k fo r i n advan ce of a p ote n t i a l trad e as i t
i s s etti n g u p .

Pay atte n t i o n to each stoc k ' s re l ative stre n gth i n re l at i o n to the

i n d e x . W h i c h ones are trad i n g s i d eways with " reg u l arity" fo r
potenti al fad e trad e s a n d p i n g p o n g p l ays? W h at p ri o r p ri ce
swi n g s m i g h t p rovi d e m i c ro s u p p o rt o r re s i s tance fo r fad e
trad es? Wh i c h stocks are at o r n ear th e i r h i g h o r l ow o f th e
s e s s i o n? M o n i to r th e n at u re of e ac h stoc k ' s p ri ce waves . W h at
secto rs are s h ow i n g s i g n i fi cant stre n gth o r wea k n e s s?
Actively th i n k th ro u g h th i s typ e of c u m u l ative an alys i s w h i l e
yo u typ e i n each stock as i t s c ro l l s acro s s yo u r t i ck e r. It d o e s
n ot m atte r i f yo u typ e i n t h e s a m e sym b o l s eve ral ti m e s with i n
a m i n u te as you cyc l e th ro u g h yo u r bas ket of stoc k s . Th e
m o re ti m es yo u v i ew each sto c k , t h e bette r s e n se you g et fo r
wh at co u l d b e a p ote n ti al trad e .

I t i s t h i s i n te ractivity with th e m arket th at i s o f p aram o u nt

i m p o rtan c e . D o n 't s i t th e re i n fro n t of t h e co m p u te r s c re e n
l i k e a veg eta b l e g l u e d t o o n e o r two stock s . C o n sta ntly s earch
t h ro u g h fo r trad i n g ca n d i d ate s . W h e n you o b s e rve a pote ntial
trad e setti n g u p , keep co m i n g b ack to t h at parti c u l ar stock to
d eterm i n e i f an d w h e n it i s read y to be trad e d .

O n ly th ro u g h actively e n g ag i n g the m arket i n th i s con stant

fas h i o n w i l l yo u tru l y l e arn th e p e rs o n al i ty of each stock ' s
typ i cal p ri ce b e h av i o r o n both t h e c h a rts a n d l evel I I q u ote
scree n . Eac h stock d oe s h ave its own i n d iv i d u al p e rs o n al i ty.

Th ro u g h ti m e and e x p e r i e n ce yo u w i l l g row i n th i s m ost

i m p o rtant "art" of trad i n g . I can n ot ove r e m p h as i ze th e i m p act
of conti n u al i nte ractivity with yo u r stocks o n yo u r g rowth as a
trad er. Ove ral l d i s c i p l i n e i n yo u r trad i n g i s th e fo u n d at i o n of
s u cces s . B u t p e rs i ste n t i nteract i o n a n d o b s e rvati o n of yo u r
stocks i s th e o n l y k i n d of seas o n i n g that w i l l e x p a n d yo u r
trad i n g ab i l i t i e s a n d g row yo u r ave rag e p rofits ove r ti m e .

So t h i s i s h ow yo u s e e k o u t a n d fi n d g ood , q u al i ty trad es d ay
i n a n d d ay o ut. Th e re i s n o m ag i c to the p roce s s - j u st g ood
o l d -fas h i o n ed work as with any oth e r worthw h i l e e n d eavo r.
M ake i t yo u r g o a l a n d p u rpose to a p p ly t h o s e trad i n g
strate g i e s t h at yo u are co m fo rtab l e w i t h a n d t h at work fo r yo u .
Trad e t h e m a n d e m p l oy strict d i s c i p l i n e a n d q u a l i ty m o ney
m an ag e m e n t !
N EWS T H AT A F F ECTS
T H E M A R K ETS
 NEWS THAT AFFECTS THE M ARKETS

M any trad ers h ave th e t e l ev i s i o n tu n ed i nto C N B C d u ri n g t h e

m arket d ay . C N BC p rovi d e s s o m e g ood com m e n ta ry as we l l a s
u p t o the m i n u te n ew s . Th ey a l s o a re a g oo d s o u rce fo r
m o n ito r i n g F. O . M . C . m eeti n g s a n d m o nth l y re p o rts fo r
u n e m p l oym e n t, con s u m e r p ri ce i n d e x , p ro d u ce rs p ri ce i n d ex
etc . Oth e r o n l i n e s e rvices a l s o p rov i d e th e s a m e i n fo r m ati o n .

M ake s u re t h at you k n ow a b o u t a n y s i g n i fi cant re p o rts o r n ews

i te m s s c h e d u l ed fo r re lease each m arket d ay , a n d w h at ti m e
they are to b e re l e as e d . It i s u s u a l ly d i ffi c u lt to trad e i nto o r
o n re p o rts that m ove t h e stock m ar ket. Yo u d o not k n ow h ow
a l l of the m arket p l ayers h ave a l ready p o s i ti o n ed t h e m s elves
(l o n g , s h o rt o r fl at) com i n g i nto a n a n n o u n c e m e n t. I n
ad d iti o n , you a l s o d o n ot k n ow h ow the p l ayers are g o i n g to
re s p o n d to the n ew s . Are th ey g o i n g to b uy o r s e l l?

Good n ews i s ofte n fo l l owed by a s e l l off; b ad n ews i s ofte n

fo l l owed by a stro n g ral ly - g o fi g u re ! Try n ot to b e a p ro p h et .
I n stead , w a i t fo r the n ews o r re p o rt to co m e o u t a n d b e
d i g ested by th e m arket p a rti c i p ants . U s u al ly a l l h e l l b reaks
loose as th e m arket and i n d ivi d u al stocks rip u p th e n d ow n ,
th e n b ac k u p , o n l y to s ettl e s o m ew h e re w h e re th ey were
befo re the a n n o u n ce m e nt h it the ai rwave s .

It i s b e st to sta n d as i d e d u ri n g t h e s e m as s ive cros s c u rre n ts

created by a n eve n t s u c h as a fed rate h i k e o r l owe r i n g of
i nterest rates . You m ay b e a b l e to s cal p a few stocks , b ut b e
q u i c k to e x i t t h e trad e s i n ce s o m u c h w h i p saw i n g act i o n
typ i c a l l y e n s u e s .

I wanted to i n cl u d e th i s s h o rt secti o n s i m p ly becau s e i t can

ru i n a g ood d ay i n th e m arkets i f yo u are n 't carefu l . Wait u n ti l
the d u st s ettl e s afte r fi ftee n to th i rty m i n u te s . T h e n th e
m arket m ay p i c k a true d i recti o n w i th fo l l ow t h ro u g h . Loo k fo r
pote ntial stock d ay trad e s o n ce the b arrag e h as pas s e d .

As I write th i s at the e n d of a trad i n g d ay , I want to s h ow you

th e effect a fed rate h i ke h ad o n the N a s d aq - l 00 and the S&P
500 fu t u re s con tract. J u st look at the 5 - m i n ute c h art of each
and th i n k about w h at wo u l d h ave h ap p e n ed if yo u were e i th e r
l o n g o r s h o rt. Y o u co u l d h ave g otte n " k i l l e d " e i t h e r way.

The rate h i ke was r e p o rted at 2 : 1 5 p . m . Easte r n Ti m e . See

w h at th e i n d i ces d i d d u r i n g the n ex t fi fte e n to th i rty m i n u te s .
Th i s i s a l s o wh at m ost stocks d i d a s wel l . K i n d o f s o b e r i n g
i s n 't it?

The m e s s age i s : B E CAR E F U L !

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C O N C LU S I O N
 CONCLUSION

Th i n k of al l of t h e b o o k s a n d w e b s ite e d u cati o n a l m aterial o n

trad i n g t h at i s avai l a b l e the p u b l i c . With s u c h a vari ety of
trad i n g s trate g i es a n d tech n i q u e s , y o u can l itera l l y d rown i n a
sea of i n fo r m at i o n -ove r l oad . W h i c h strategy i s the b e s t a n d
m ost p rofitab le? That ' s the o n e I want to u s e .

Why d o we wear o u rselves o u t o n th e l o n g j o u r n ey o f s t u d y

a n d searc h i n g ? It i s s i m p ly beca u s e m ost of u s can n ot o r d o
n ot k n ow h ow to co n s i ste n t l y m ake m o n ey d ay trad i n g .

We try a l l var i eti e s of tech n i q u e s b u t sti l l n eve r reach th e p o i n t

o f sati sfact i o n . W e search beca u s e w e a r e h u n g ry - h u n g ry fo r
learn i n g t h at we can p ut i nto p ract i ce a n d act u a l l y ach i eve
s u cce s s . H u n d red s a n d th o u s a n d s of o u r d o l l ars are p o u red
i n to trad i n g syste m s , researc h , boo k s , s e m i n ars etc. and we
sti l l fi n d o u rselves " ru n n i n g i n p l ace . "

A n d ye s , I h ave two p u b l i s h ed b o o k s as we l l as a v i d eo h o m e
study co u rs e . Th i s m an u al i s a n exte n s i o n o f the trad i n g
m ethod o l ogy that they cove r . B u t I w e n t t h ro u g h the l earn i n g
c u rve as w e a l l e n d u re . I own ove r 1 00 trad i n g b o o k s a n d h ave
p a i d u nto l d s u m s fo r trad i n g co u rs e s , software a n d
reco m m e n d at i o n s e rvices ove r th e cou rse o f the l ast 1 5 yea r s .

I d i d l earn a l ot! I cam e fu l l -ci rc l e fro m t h e d e pth s of th e m ost

exoti c and m u lti p l e i n d icato r r i d d e n strateg i e s t h at I co m p u t e r
coded myse l f. I n th e e n d of th i s stru g g l e , I cam e b ac k to th e
b as i cs of s i m p l e tec h n i cal a n alys i s u s i n g b a r c h a rts . Th i s i s
wh at h as worked b est fo r m e . It i s a l s o to s o m e d e g ree w h at
h as worked fo r s o m e of t h e m ost s u cces sfu l t rad ers I k n ow.

Sto p yo u r u n e n d i n g search and start trad i n g . M ake s u re you

h ave s o m e basic m et h o d s and tec h n i q u e s fo r d ay trad i n g
eq u i ti e s . Th ey d o not h ave to b e p e rfect o r ri g ht al l of t h e ti m e
o r even m ost of t h e ti m e . J u st i m p l e m e n t t h e m with a good
q u al ity trad e m an ag e m e n t and m o n ey m an ag e m e n t p l an . It
re al ly is t h at s i m p l e .

Ove r ti m e yo u w i l l g row i n t h e "art" o f trad i n g a s yo u co m e to

u n d e rsta n d a n d "fe e l " h ow yo u r tec h n i q u e s work w i t h th e
stocks yo u c h oose to d ay trad e . Th i s ex p e ri e n ce i s th e
seas o n i n g t h at g rows ove r ti m e .

I t m ay take m o nt h s a n d years . B u t i f yo u h ave a ny s e m b l a n ce

of an aptitu d e fo r the m a r kets , yo u w i l l trad e b ette r a n d m o re
effectively as each week g oes by. Y o u m u st m ai ntai n strict
d i s ci p l i n e i n yo u r m ethod s a n d m o n ey m an ag e m e n t to s u stai n
th i s g rowth .

I b e l i eve b oth of m y p ri o r b o o k s , as we l l as m y h o m e s t u d y
co u rs e , ad d res s t h e s e p o i n ts i n s i m p l i stic d etai l . Th i s m an u al
stan d s al o n e as th e exte n s i o n of m y act u a l trad i n g eve ry
m ar ket d ay . T h e s e strateg i e s are th e tru e s p i ri t of h ow I
ch oose a n d m an ag e each trad e i n m y b u s i n e s s of trad i n g .
Learn fro m m y ex p e r i e n ce . Th i s i s why s o m an y actu al c h a rts
h ave b e e n i n c l u d ed with exte n s ive a n n otati o n s i n th i s m an u a l .
It i s t h e best way to l e a r n a n d tru l y u n d e rsta n d trad i n g
strate g i es wel l e n o u g h s o t h at you can i n corp o rate th e m i nto
yo u r own d ay trad i n g .

O n e p ri m ary com p l a i n t of m an y trad e rs (as i t s h o u l d be) i s t h at

a b o o k s pe l l s o u t s o m e g reat trad e e nt ry tec h n i q u e s b ut fai l s
to adeq u ately ad d re s s h ow b e s t to ex i t th e t rad e . Both of m y
p ri o r books ad d re s s e x i t strate g i e s fo r b oth i ntra d ay tre n d
trad i n g a s we l l a s th e s h o rter te r m scal p i n g . Th i s m an u a l i s a
b i t d i ffe re nt.

M y goal was to re l ate to you th e m o st s i g n i ficant

ch aracteri stics of m arket b e h avi o r - t h e m o st i n fl u e ntial facto rs
t h at affect th e n atu re of stock p ri ce m ove m e n t i ntrad ay. Th i s
i s w h at we want to k n ow as d ay trad ers . I t p rovid e s u s with
pote ntial e ntry p o i nts i n to a stock d ay trad e , b ut th e co n cepts
a l s o g ive you a s e n s e of w h e n yo u m i g h t w i s h to e x i t. Th i s
was ad d re s s ed m ai n ly i n the secti o n s o n p ri ce waves a n d i n the
m i cro s u p p o rt and res i sta n ce of fad e trad es .

Yo u wi l l s e l d o m b u y th e exact l ow o r s e l l the ex act h i g h of a

m ove w h et h e r e n te r i n g o r ex iti n g a trad e . Th i s i s n ot yo u r
g o a l . Yo u r g o a l i s to i m p l e m e n t the trad i n g strateg i es w i t h
q u al ity - the p rofi ts s h o u l d fo l l ow ove r ti m e .

Let's revi ew th e strateg i e s . Trad i n g i n t h e d i recti o n o f th e

m arket i n d ex i s of u t m o st i m p o rtan ce with each strate gy.

1 ) Trad i n g o n i n trad ay re l ative stre n gth

2) Price waves
3 ) Fad e trad i n g m i cro s u p po rt / re s i stan ce
4 ) P i n g p o n g p l ays
5 ) Trad i n g n ew i n trad ay h i g h s & l ows
6) P l ayi n g stock s ecto rs

Read t h ro u g h the text a n d exa m p l e s i n each s ecti o n . A b s o r b

eve ry trad i n g n u ance th at i s d escri b ed a n d s h own . Th e n
activel y o b s e rve t h e s e m ost p ro m i n e n t c h aracte ri stics a s they
p l ay o u t d u ri n g t h e d ay fo r the b as k et of stock s th at you
fo l l ow . You w i l l see th at these s i m p l e , yet h i g h ly effective
strateg i e s u nfo l d i n m an y d iffe rent stock s , d ay i n a n d d ay o u t.

Th i s i s h ow I m a ke o r l o s e m o n ey i n the m arket eve ry d ay. I

am very r i s k ave rse a n d te n d toward a scal p i n g strateg y t h at
fi ts m y p e rs o n a l i ty. I h ave o n ly h ad th ree l os i n g m o n t h s i n the
p ast two years . Co n s i ste n cy is my m otto .

Trad e t h e styl e th at fi ts yo u r p e rs o n al i ty t h e b e s t . Oth e rw i s e ,

yo u w i l l fi n d yo u rs e l f i n a l o s i n g b attl e a s yo u fi g h t yo u rs e l f.
Yo u wi l l te n d to i m p l e m e n t e n t ry a n d exit strateg i e s t h at d o
n ot fi t yo u r r i s k para m ete rs .

Let m e l e ave yo u with t h i s fi n al m ax i m . Yo u r ab i l i ty to

d i s c i p l i n e yo u rs e l f to trad e with q u a l i ty trad i n g strateg i e s a n d
e n act a p re- p l an n e d m o n ey m a n ag e m e nt strategy wi l l a l l ow
yo u to b e aro u n d l o n g e n o u g h to h ave a c h ance to s u cceed as
a d ay trad e r . It's real ly that s i m p l e - d i sc i p l i n e , d i sc i p l i n e ,
d i s c i p l i n e . . . a n d m o re d i s c i p l i n e !
I s i n ce re l y w i s h fo r yo u r i n c reased s u cce s s i n yo u r eq u i ty d ay
trad i n g e n d eavors .
 WEBSITE RESOURCES

bigcharts.com on- line charting and more

briefing.com broad spectrum of market analysis daily
cbs.marketwatch . com an extensive variety of information and news
c learstation.com lots of current charts and indicators for trading and
educational purposes
equitytrader.com John Bollinger's site: includes stock sector lists
freerealtime.com just as the name implies plus tons of research , all
combined into a one-stop-s h op
hardrigh tedge.com good educational site for trading ideas/ strategies
ipocentral.com monitor upcoming ipo's and track their performance
jagnotes.com upgrades/ downgrades, earnings and more to prepare
for the trading day
marketmavens.com a diverse and comprehensive site for traders
mu rph ymorris.com John M urphy (former ly with C NBC) and G reg M orris
provide up-to-date tech nical analysis of the markets
sceptretrading.com au thor's website
tc2 0 0 0 .com simply a great, affordab le, end-of-day charting software
tech stocks.com the silicon investor website with tons of message postings
telescan.com excel lent, customizab le stock screening and charting package
th estreet.com savvy market and stock commentary
th omsoninvest. net expansive investor/ trader resou rce of information
tradecast.com what I believe to be the best, high - end software trading
package - I use it for my own trading every day
traders.com website of "Stocks & Commodities" magazine
traderspress.com the best on- line bookstore availa ble for traders
vectorvest.com a unique fundamental / technical analysis software package