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Joshua L

DAS Simulator 12 week program

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Hello all,

 

I'm Josh (Joshua L in the chat). I have recently started my three month DAS simulator trial. I am wondering if anyone has created a week by week goals list. For example, week one - learn this, week two - learn that. So by the end of 12 weeks we are proficient traders (at least as much as possible). I think this would really help us new comers get the most out of this program. Also, I wasn't sure where exactly to post this thread.

 

Thanks!

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Since everybody has different levels of experience with the stock market, it is difficult to have a one-size-fits all objective list. I am going to try to cover all the areas that you should have a firm grasp of by the end of the 3-months. It is a rough outline of what I have learned after 4 months of paper/real trading. This post will be a work in progress, but here goes.

 

~IN PROGRESS~

 

Day Trading is probably the most deceiving profession on the planet. On the surface the concept seems very simple: buy low and sell high. Then why is it that 90% of traders fail at his endeavour? Surely they aren't trying to do the exact opposite of what is profitable. Even flipping a coin has better odds at 50%. Let's take a look under the hood to see what is required to be a successful trader.

 

CLASSES

There are four classes in total. Each one runs about 1 hour, except for class 4 which is almost 2 hours. It is recommended that you attend the classes multiple times to reinforce your knowledge, refresh the concepts, as well as stay updated on any new material. It is your responsibility to go over the slides and understand what is being taught. If you have any questions, please ask them during class, in the forums, or in the chat. The community is always here to lend a hand. You should also bookmark the Bear Bull Traders FAQ and DAS Trader Pro FAQ. Some members choose to read additional day trading books, as well as practice trading replayed market data.

 

What you get out of the course is directly related to how much effort you put in. In a sense, the entire 3-months is more of a self-paced learning program than a structured course. There are no quizzes, no tests, no projects and no scoring. It is up to you to wake up every morning and spend time in the chair mastering the trade. Nobody will hold your hand, watch over your shoulder, or monitor your performance in any way. That is how day trading is in real life: absolute freedom to stake your fortune or self-destruct and implode.

 

STOCK MARKET BASICS

-Warren Buffet once said 'The stock market is a device for transferring money from the impatient to the patient.' This is true for long term investing and for day trading. Remember that for each transaction you see in the Time/Sales window, there is a buyer and seller. When a stock is down 20% on the day and you short it, somebody is on the other side of that transaction buying. You don't know their hand though. They could be covering their short from earlier, it could be institutions loading up for long term investment, somebody hedging an options contract, etc. Beginners often gloss over this point. Volume represents transactions being filled; a transaction always involves two parties. You are trading against other people, not the market itself.

 

-Exchanges: NYSE, NASDAQ, AMEX

-Market Makers

-Pre-market and after-hours

-High Frequency Trading (HFT), algorithms

-Bid, Ask, Spreads

-Short-selling. What does it mean.

-Short inventory. Why are some stocks shortable and others not

-Short Sale Restriction (SSR)

-Short interest, or Short Ratio

-Share float

-5-cent tick programs

-Circuit Breaker Halts

-News, earnings, and catalysts

-Buyouts

-Pattern Day Trade Rule

>>> Make sure you understand the above prerequisites before proceeding any further. Investopedia is a great resource.

 

CHARTS

-Candle Sticks. How to read them.

-Understanding Price Action. Bearish vs bullish candles. Indecision candles.

-Higher highs and higher lows / Lower highs and lowers lows

-1-minute vs 5-minute chart

-Moving averages and how they are calculated in different timeframes

-VWAP. Why it's an important intraday indicator

>>> The above concepts are not tool-specific and apply to all trading platforms

 

MECHANICAL ASPECTS

-Knowing your tools (DAS)

-Platform, Hotkeys, Scanners, Journaling

-Order entry. Limit, market, marketable limit, stops

-Level 2

-Calculating commissions and tickets

>>> The goal is to familiarize yourself with DAS and be comfortable using it. For some this could take days. For others this requires weeks.

 

TECHNICAL AND STRATEGIES

-Finding Stocks in Play

-Good vs. bad pre-market price action

-Finding Support/Resistance Levels

-Day trading Strategies. Master recognizing the patterns, entries, stops, targets.

-ABCD / Reverse ABCD

-Bull Flag Momentum / Bear Flag

-Fallen Angel

-VWAP False Break Out

-VWAP Reversal

-VWAP Trend Trade

-Opening Range Breakup / Opening Range Breakdown

-Red-to-Green / Green-to-Red

-Moving Average Trend Trade

-Top Reversal / Bottom Reversal

-Time of Day: Open, Late Morning, Midday to Close

>>> Everybody will pick this up at a different pace--learning to recognize different strategies, figuring out which one works best for you (at what time of day), etc.

 

MANAGING YOUR ACCOUNT

-Risk Management

-Position Sizing

-Money Management

 

PRACTICE THE PROCESS OF EXECUTING A GOOD TRADE

Putting on a trade is more than buying at point A and selling at point B. You need to combine everything you learned to get in and out of a single trade properly:

1) finding good stocks in play

2) identifying chop and staying away

3) identifying the strategy or setup

4) quickly calculating risk-to-reward

5) getting a good entry and avoid chasing/jumping the gun

6) managing the trade based on live price action and new information which the market is providing you

7) taking profit (often overlooked, yet it involves half of the entire trade)

8) you need to do all of the above while keeping your emotions in check and fighting your psychological demons

>>> Over the 3-month period, you will repeat this process hundreds of times. This is where the bulk of your time will be spent. Learning to take good trades and improving on your mistakes. This is the only path to consistency. Don't waste time trading unrealistic sizes on low-float stocks because you won't learn a thing.

>>>Some of your trades will turn out to be winners, some will turn out to be losers. Most likely you will have a few trades that blow up your practice account (but don't worry, you weren't taking things seriously and would never do it live, right?).

 

GOING LIVE

-Choosing a broker

-Starting small and gradual position sizing

-Returning to Simulator

-Peer-to-peer support

 

PSYCHOLOGY OF TRADING

-Why do most traders fail here

-I'm highly intelligent, analytical and very disciplined. Why this will ruin your trading.

-I'm a good poker player. Good--you will be playing against yourself

-Revenge

-Overtrading

-Fear of missing out (FOMO)

-Fear of pulling the trigger

-Trading scared

-Averaging down

-Turning a day trade into a swing trade

 

~IN PROGRESS~

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Excellent post Robert! I've been day trading now almost two months in sim and I just keep on getting burned out... This post is super helpful. I'm waiting for the rest.

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Good post Robert, thanks for putting this together as a reminder...maybe something to post somewhere as a sticky so bumping it up for now...

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I expanded on The Process of Executing a Good Trade in this post.

 

it takes a lot of practice to plan a trade in real-time (especially in the first 30 minutes of the market). At least a month and hundreds of attempts until you develop a process that works for you. Once you get good at planning and managing the trade, you will be able to do it faster and faster each time. Like muscle memory of sorts. Here is what works for me:

 

Prerequisites

1. Stock is in play

2. Support and resistance identified in pre-market

3. Pre-market volume and price action is tradable

4. Know the float category (low, mid, high) and how many shares you plan to take

 

While watching the stock

1. Spread is manageable

2. ATR/price swings accounted for (i.e, see how much the stock ticks. Is it going up/down in 0.01 to 0.05 increments, or 0.50 to $1)

3. Price action is clean and not choppy; related to above

4. Volume is good and not dying

5. Who is control: buyers or sellers?

6. What is the strategy/pattern that is setting up here?

7. Is the price getting extended?

 

Finding an entry

1. Is the entry favourable (new 1-min or 5-min high), or will it be a chase

2. Did the stock pullback yet? If not, to which level will it test and will I survive that?

3. What's the target? Is it realistic?

4. Finding a reasonable stop at a technical level

5. Calculating the risk-to-reward

6. Executing the order; with conviction--no hesitation

 

Managing the Trade

1. Is the live price action still clean?

2. Are we making higher-highs and higher-lows, or vice versa?

3. Are there are levels or tops/bottoms that I missed before entering that have now become a factor (i.e, a moving average on the 1-minute chart)

4. Is the market providing new information that validates or invalidates my original criteria? Is the Level 2 bullish, bearish or neutral?

5. Is it a good time to add more (if you scaled in initially), or should you take some profit off the table?

6. If scaling out, how much and at what levels?

7. Is the price action conducive to my original stop/target?

8. Is control between buyers and selling shifting?

9. Given the above, does it make sense to stay in the trade or exit at break-even, before stop, or before target?

 

I know that is a lot to process in a short amount of time, but those thoughts go through my head during a trade. For others, it may be much simpler or even more complex.

 

 

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In regards to:

 

Prerequisites

 

3. Pre-market volume and price action is tradable.

 

I believe all of the members would enjoy and take a lot out of a class on this topic. BBT does a great job teaching, but I feel there has not been a lot of emphasis on how exactly to read the premarket action. I know Andrew goes over it every morning as he builds the watch list, but its so fast and I don't get exactly how his mind is working when it comes to reading the premarket.

 

Thanks for this list Robert H, its great. I'm a huge fan of videos that I can go back to and view over and over again. A video with examples for each of these bullet points would be fantastic. Yes I'm being greedy with wanting all of these videos, but I think it would be a huge help to everyone.

 

Cheers,

 

-Joshua L

 

 

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Josh, Andrew goes over pre-market price action in Class 2.

 

Basically you want at least 100k volume that is smooth throughout the morning (not block trades). Also, the candles should be 'clean' and not some ugly chop fast. Since pre-market volume is much thinner, it's not going to look as clean as market patterns, but the price should still respect levels and do 'waves'. Watch Class 2 for specific examples.

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