Day Trade Online (Wiley Trading)

Day Trade Online, Second Edition......Page 1
CONTENTS......Page 9
PREFACE......Page 15
ACKNOWLEDGMENTS......Page 21
INTRODUCTION......Page 23
SECTION I: The World of the Day Trader......Page 27
CHAPTER 1: Exploiting the Excesses of Capitalism......Page 29
THE HOUSE EDGE......Page 31
THE BID-ASK SPREAD......Page 33
SECTION II: Introduction to Day Trading......Page 39
THE MIND-SET OF AN ONLINE DAY TRADER......Page 41
HIT SINGLES, NOT HOME RUNS......Page 42
BROKERAGE COMMISSIONS CAN DESTROY PROFITS......Page 43
BUY IN ON FEAR, SELL IN ON GREED......Page 44
THE SLOW EXECUTION......Page 45
IS THE NYSE AN EASIER MARKET TO TRADE?......Page 46
SECTION III: How to Beat Wall Street at Its Own Game......Page 47
UNDERSTANDING WALL STREET’S CONFLICT OF INTEREST......Page 49
PRICE MAKERS VERSUS PRICE TAKERS......Page 51
THE BARGAINING PROCESS......Page 52
PRICE NEGOTIATION—MARKET VERSUS LIMIT ORDERS......Page 54
WALL STREET’S PREY......Page 56
PRELUDE TO THE BID-ASK SPREAD......Page 57
A SNAPSHOT OF A MOVING PICTURE......Page 59
THE MECHANICS OF PRICE MOVEMENT—UNDERSTANDING WHAT MAKES A STOCK MOVE HIGHER......Page 61
EXAMPLE 1: THE QUOTE—SNAPSHOT OF A MOVING PICTURE......Page 63
EXAMPLE 2: THE MARKET ORDER TO SELL—HITTING THE BID......Page 68
EXAMPLE 3: THE MARKET ORDER TO BUY—LIFTING THE OFFER......Page 70
EXAMPLE 4: THE LIMIT ORDER TO BUY—BIDDING FOR STOCK......Page 72
DAY ORDERS VERSUS GOOD-UNTIL-CANCELED (GTC) ORDERS......Page 74
EXAMPLE 5: THE LIMIT ORDER TO SELL—OFFERING STOCK......Page 76
HAGGLING OVER NICKELS AND DIMES......Page 78
EXAMPLE 6: MOVING THE STOCK HIGHER......Page 79
CHAPTER 5: The Role of the Specialist on the New York Stock Exchange......Page 83
USING THE SPECIALIST SYSTEM TO YOUR ADVANTAGE......Page 86
WHAT IF THERE WERE NO NYSE SPECIALIST?......Page 88
BUYER OF LAST RESORT......Page 89
A LICENSE TO STEAL?......Page 90
THE SPECIALIST’S LIMIT ORDER BOOK......Page 91
BEING ON BOTH SIDES OF THE MARKET......Page 93
NARROWING THE BID-ASK SPREAD......Page 94
WIDE SPREADS PROTECT THE SPECIALIST FROM VOLATILITY......Page 95
HANDLING A LARGE SELL ORDER......Page 96
BEWARE WHEN THE SPECIALIST TAKES THE OTHER SIDE OF YOUR TRADE......Page 99
THE DAY TRADER AS A SHADOW SPECIALIST......Page 100
THE NYSE’S FAIR ORDER HANDLING RULES......Page 102
HOW CAN YOU DETERMINE WHERE THE SPECIALIST LURKS IN THE STOCK?......Page 107
JOCKEYING FOR POSITION......Page 109
WHEN IN DOUBT, ASK THE NYSE FLOOR......Page 111
TIPPING THE ODDS IN YOUR FAVOR......Page 114
BEWARE OF THE SPECIALIST......Page 115
SECTION IV: Introduction to Scalping the NYSE: Taking Food Out of the Specialist’s Mouth......Page 117
CHAPTER 6: The Day Trader’s Secret Weapon......Page 119
HOW CAN YOU MAKE MONEY TRADING STOCKS THAT DON’T MOVE?......Page 120
THE ROLE OF THE SCALPER......Page 121
OPERATING UNDER THE RADAR......Page 122
AVOIDING THE GLAMOUR STOCKS......Page 124
FINDING THE TRADE’S SWEET SPOT......Page 125
SIMPLIFYING A COMPLEX PROCESS......Page 126
OTHER MOVING PARTS TO THIS TRADE......Page 127
A BET WITH THE HOUSE?......Page 131
A FEW WORDS ON RISK......Page 132
SECTION V: Trading the Market’s Momentum: How to Profit from Volatility......Page 135
CHAPTER 7: Exploiting Market Volatility and Momentum......Page 137
THE SPECIALIST AND THE UPPER HAND......Page 138
PLAYING THE GAP OPEN—A STRATEGY FOR BETTING WITH THE HOUSE......Page 139
BUYING ON BAD NEWS......Page 140
BETTING ON THE SPECIALIST......Page 141
PARAMETERS OF THE GAP-OPENING TRADE......Page 144
HOW TO TELL IF THE OPENING TRADE WILL “CLEAR” THE SPECIALIST’S LIMIT ORDER BOOK......Page 146
SELLING BEFORE THE SECOND WAVE......Page 147
WHY LIMIT ORDERS DON’T WORK IN A RALLY......Page 149
LIGHTNING-FAST MARKET UPSURGE: HOW OFFERS VANISH IN THE VAPOR TRAIL......Page 151
STOCK FOR SALE BECOMING SCARCE......Page 152
NASDAQ AND THE ROLE OF THE MARKET MAKERS......Page 153
A FEW WORDS ON SHORT SELLING......Page 157
TWO METHODS FOR DAY TRADING NASDAQ STOCKS......Page 158
THE APPLE COMPUTER TRADE......Page 161
BUYING STRONG STOCKS ON PULLBACKS......Page 162
THE DANGERS OF BUYING A STRONG STOCK ON THE OPENING TRADE......Page 163
INFLICTING HEAVY DAMAGE ON THE MARKET MAKERS BY ATTACKING THEIR VULNERABILITY......Page 164
CHAPTER 8: The Day Trader’s Ticket to the Poorhouse......Page 167
HOW COULD THE STOCK GO ANY LOWER?......Page 169
A FEELING OF IRRESISTIBLE GREED......Page 170
THE NEED TO BREAK EVEN......Page 172
BUYING THE STOCK FOR THE THIRD TIME......Page 173
FEELING OF DEVASTATION LEADS TO USEFUL INSIGHTS......Page 174
CAN THE QUOTED MARKET ALWAYS BE TRUSTED?......Page 178
A FOOL AND HIS MONEY ARE SOON PARTED......Page 181
CHOOSING AN ONLINE BROKER......Page 183
MAKE SURE THAT THE BROKER CAN ROUTE DIRECTLY TO THE NYSE......Page 185
SETTING UP AT LEAST TWO ACCOUNTS......Page 186
SYSTEM CRASHES AND THE LATE FILL......Page 187
THE REMEDY—KEEP GOOD TRADING RECORDS......Page 189
THE HOME OFFICE AND THE VIRTUAL TRADING FLOOR......Page 191
APPENDIX B: 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......Page 195
ALLOCATION OF TRADING CAPITAL......Page 196
TRADING ON MARGIN......Page 199
MARGIN CALLS......Page 200
PART-TIME VERSUS FULL-TIME TRADING......Page 201
INDEX......Page 205