book

Day Trading For Dummies, 4th Edition

by Ann C. Logue

April 2019

Beginner

368 pages

10h 17m

English

For Dummies

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About This BookFoolish AssumptionsIcons Used in This BookWhere to Go from Here
Defining Day Trading: It’s All in a Day’s WorkCommitting to Trading As a BusinessIdentifying the Personality Traits of Successful Day TradersSeeing What Day Trading Is Not
Having a Firm Grasp How Markets WorkOpening an Account and Placing an OrderDefining the Principles of Successful Day TradingUnderstanding Risk and ReturnDifferentiating Trading, Investing, and GamblingManaging the Risks of Day Trading
Grasping the Different Things to TradeDefining a Good Day Trading AssetTaking a Closer Look at StocksExamining BondsCashing In with CurrencyConsidering Commodities and How They Trade
Explaining Exchange-Traded Funds (ETFs) in Plain EnglishGetting Familiar with CryptocurrencyDealing in DerivativesComprehending Arbitrage and the Law of One Price
Understanding the Magic of MarginThe Switch-Up of Short SellingLeveraging All Kinds of AccountsBorrowing in Your Trading BusinessAssessing Risks and Returns from Short Selling and Leverage
Setting Your Earnings ExpectationsGaining Advantage with a Money-Management PlanExamining Styles of Money ManagementSeeing How Money Management Affects Your ReturnPlanning for Your Profits
Starting to Plan Your Trades: Just the Basics, PleaseClosing Out Your PositionMaxims and Clichés That Guide and Mislead Traders

Comparing Research Techniques Used in Day TradingUsing Technical AnalysisReading the ChartsConsidering Different Approaches to Technical AnalysisAvoiding Technical-Analysis Pitfalls
Psyching Out the MarketsTaking the Temperature of the MarketMeasuring Money FlowsConsidering Information That Crops Up during the Trading DayIdentifying Anomalies and Traps
Creating Your Own Trading ProgramProgramming, the Day Trading WayBacktesting Once, Backtesting TwiceBuilding on Some Standard StrategiesArbitraging for Fun … and ProfitScalping, the Dangerous GameUnderstanding Risk Arbitrage and Its ToolsExamining Arbitrage StrategiesBeing Aware of Those Pesky Transaction Costs
Recognizing What Investors Can Glean from TradersApplying MomentumWhen an Investor Considers Trading
Understanding the Trade of TradingGetting the Research You NeedDoing Your Due Diligence
Before You Trade: Testing Your SystemDuring the Day: Tracking Your TradesAfter You Trade: Calculating Overall Performance
Planning Your Trading BusinessSetting Up Your Trading LaboratoryGetting Mobile with the MarketsControlling Your Emotions
Choosing a BrokerageDiscussing Brokers for Day TradersBeing Aware of Brokerage Scams
Looking Back on the Road to RegulationsReviewing the RegulatorsWorking with Brokers’ RulesWatching Out for Insider TradingPreparing for Rule Changes in Crisis ConditionsTaking on Partners
Getting the Lay of the Land: What You Need to Know Based on What You TradeHiring a Tax AdviserDoing Your Taxes YourselfIdentifying Income Categories You Need to KnowTracking Your Investment ExpensesTop Secret Tax Information for IRS-Qualified Traders OnlyDiscussing Other Important Tax Info: Forms and DeadlinesUsing Self-Directed IRAs
You Love Being IndependentYou Want to Work Anywhere You LikeYou’re Comfortable with TechnologyYou Want to Eat What You KillYou Love the MarketsYou Have Market ExperienceYou’ve Studied Trading Systems and Know What Works for YouYou’re Decisive and PersistentYou Can Afford to Lose MoneyYou Have a Support System
You Want to Discover Investing by Day TradingYou Love Fundamental ResearchYou’re Short on Time and CapitalYou Like Working As Part of a GroupYou Can’t Be Bothered with the Details of Running a BusinessYou Crave ExcitementYou’re ImpulsiveYou Love Going to the CasinoYou Have Trouble Setting BoundariesYou Want to Get Rich QuickThe Guy on YouTube Said It Would Work
Starting with Unrealistic ExpectationsBeginning without a Business and Trading PlanIgnoring Cash ManagementFailing to Manage RiskNot Committing the Time and Money to Do It RightChasing the HerdSwitching between Research SystemsOvertradingSticking Too Long with Losing TradesGetting Too Emotionally Involved
Taking Money off the TableUsing StopsApplying Gann’s 10 Percent RuleLimiting Your Losses with the Fixed Fractional SystemIncreasing Returns with the Fixed-Ratio SystemFollowing the Kelly Criterion FormulaFiguring the Amount to Trade with Optimal FMeasuring Risk and Sizing Trades with Monte Carlo SimulationTaking a Risk with the Martingale SystemThrowing It to the Fates
Great Books for Great TradingThe Trader’s InternetOther Mainstream Media

Content preview from Day Trading For Dummies, 4th Edition

Chapter 10

Eliminating Emotion with Program Trading

IN THIS CHAPTER

Seeing strategies

Preparing to program

Backtesting, Backtesting, Backtesting

Building on some standard strategies

Arbitraging your way to new opportunities

In a way, day trading is simple. You see an indicator showing that a trend is starting. You place a trade. Then, when the trend is over or you hit your loss limit, you close out the trade.

Ah, but there are two challenges. The first is identifying an indicator or trend in enough time to trade on it. The second is fighting your emotions so that you actually execute the trade and then close it out – and not execute a completely different trade, or be too overcome with doubt to place the trade, or wish and hope that the loss will magically reverse itself.

Many traders find that the way to make trading work is to do it automatically. They set up their accounts to scan for indicators, and then they place the trades for them. Some traders trust their systems enough ...