iif_kpmp_Borsellino_Day_Trader_s_Course.pdf

March 30, 2001

market activity on, 125–126

Morning Meeting commentary on, 121–125 margin call, 46

margin requirements, 45–46 market order, 34 MarketXT, 37

May 9, 2001, 154–156

McDonald’s Corporation, 80–81, 82 Microsoft Corporation (MSFT), 1, 162–163,

164, 171–172 midday break, 111

misconceptions and myths, 93–94 mistake, biggest, 186–187 momentum trading, 144, 173 money

focusing on trade rather than, 6–8, 10–11, 13, 98–100

as “raw material inventory,” 11 as seed capital, 100

value of, 12 monthly goals, 97

M or double top pattern, 86–88, 153, 154 morning trading session, 110, 111 motivation to trade, 3–4, 5, 13

moving averages charts and, 63–67

envelopes, using, 70–73 overview of, 62–63 trends and, 67–70

Nasdaq Biotechnology index (IXBT), 168 Nasdaq.com, 219

Nasdaq Composite access to, 36–37

high to high trend line, 77 high to low trend line, 78

Level II access to, 35–36, 38, 141–142 overview of, 161–163

performance in 2000, 1

Small Order Execution System (SOES), 23–24

viewing on screen, 141 volatility of, 163–165

Nasdaq futures contracts, 41–42 extensions, 175–176

liquidity and, 173–174, 176–177 market dynamics, 176–178 stops and, 173

subindexes to watch, 168, 171 trading, 164–165

volatility of, 172–175 watching key stocks, 167–171

Nasdaq major and e-mini contract limits, 135

Nasdaq 100 e-mini, 176

Nasdaq 100 index (NDX), 40, 141, 162–163 National Association of Purchasing

Management (NAPM) report, 150, 200 National Association of Securities Dealers

(NASD) Series 7 license, 46 news sources, 50–51

New York Stock Exchange circuit breakers, 134 DOT system, 35

Nasdaq compared to, 173 web site, 218

observation of charts, 56, 57

October 1987 (Black Monday), 107–108, 134 “off-sides” trading, 40

online trading

direct access compared to, 38–39 futures and, 39–44

pit trading compared to, 185–186 opening range, 126–127, 146–147 open outcry, 41, 185

Oracle Corp. (ORCL), 68–69, 70, 162–163, 164 oscillators, 88–91

overbought market, 86 oversold market, 86 overtrading, 112

paper trading, 106, 187–188 patterns

breakout, 83–84, 112, 156 in charts, 58–59

as indicators, 83–88

M or double top, 86–88, 153, 154 price and, 58–62

reversal, 84–86 study of, 18 wedge, 156

W or double bottom, 87–88, 158, 159 “payment for order flow,” 32

Personal Income Consumption, 200 “personality” of market, 116 Philadelphia Fed Index, 201

PHLX/TheStreet.com Internet Sector (DOT), 168

pit trading compared to screen trading, 185–186 pivotal areas, 150

plan

backup, for electronic trading system, 43 drafting, 5

execution of, 4–5, 101–102, 181 goals and, 96–100

study of patterns and, 18 See also stop-loss level

points, 48

INDEX

position

losing, adding to, 112–113 scaling into, 113–114 scaling out of, 181

prevailing market opinion, 82–83 price behavior and moving averages,

64–67

price charts, 53–54, 57 price points, 129–132

prices, discrepancies in, 32–35 price symmetry in chart patterns, 59 price targets, 182–183

Producer Price Index, 201 profits

letting run, 14–15

as taking care of selves, 2 psychological side of trading

bouncing back from bad days, 17–18 clearing mind, 5–6, 16

drafting plan, 5 ego, 7, 14 expectations, 17, 99 motivation, 3–4, 5

paper vs. actual, 106, 188 risk tolerance, 107–110

Ten Commandments of Trading, 13–16

underestimating learning curve, 9–11 See also discipline

“puke point,” 85, 86

QQQs, 168–169

Qualcomm (QCOM), 152–153, 162–163, 164

quitting

when fatigued, 94

when market goes against trader, 94

“raw material inventory,” 11 Refco, 43

regression lines, 79, 80 requirements for trading

futures, 39–44

information sources, 49–51 leverage and capitalization, 44–49 overview of, 21–22

stocks, 30–39 resistance, 60–61, 182–183 resources

economic reports, 197–201 web sites, 217–219

respect for money, 12 retail investor market, 30 retracements, 129–132 reversal pattern, 84–86

225

reward-to-risk ratio, 100–103 risk

handling with discipline, 13 hedging, 41

knowing level of, 14–15 tolerance for, 107–110

scaling into position, 113–114 scaling out of position, 181 scalping, 24, 25, 147, 185–186 screen trading

direct access compared to, 38–39 futures and, 39–44

pit trading compared to, 185–186 Sebanc, Jim, 56–57, 63, 109 second-tier stocks, 169, 170

Securities and Exchange Commission, 31, 189 Semiconductor index (SOX), 141, 168, 171 short, going, 109

short-term position trading, 144 short-term trend lines, 149 sidelines, staying on, 8–9, 15, 111 sideways market, 61

single-stock futures, 188–191 slippage, 34, 103

“slow stochastic,” 89

Small Order Execution System (SOES), 23–24 sources of information, 49–51

speculative sentiment indicator, 122–123 speculators, 24

S&P 500, 141, 163, 177

S&P futures, 40, 41–42, 183–184, 189 S&P limits, 135

spike reversal, 84–85 sports analogies, 5 spread, 33–34 staircases, 133 stochastics, 88–89 stock day traders, 25

stock indexes, 2–3, 91–92, 120–121 stocks

capital requirements, 45–46, 49 day trading of, 143–144 watching, 171–172

stock trading dynamics, 141–144 stop-loss level

being stopped out, 105 description of, 14 executing, 101–103 losing syndrome and, 95 mental vs. actual, 103–104 Nasdaq and, 173

placing, 60, 104

trailing stops, 91, 104–105 volatility and, 105

226

stop-reversal strategy, 127 “strike while the iron is hot,” 94 success

defining in first year, 3, 10 description of, 187

improving chances of, 4, 191–193 odds against, 26–28

trading for, 13 Sullivan, Brad, 9

comments by, 164–165, 169–170 goals of, 97

stock watching, 154–155 training by, 94, 95, 96 “Week in Review,” 166–167

support, 60–61, 182–183

swing high/swing low, 132–133 swing trading, 144

symmetry in chart patterns, 58–59 systematic trading, 114

“taking a breath,” 80

taxes and futures trading, 48 TeachTrade.com

description of, 3, 19, 218 Market Updates, 124

Mid-Day Updates, 128–129, 132

Morning Meeting, 121–125, 145–146, 155 Nasdaq futures market, 164

“Week in Review,” 166–167 technical analysis

assumptions of, 55

buys and sells, marking, 59–60, 65–66 chart patterns, 58–59

description of, 54 distance/energy type, 68–69 goal of, 55

importance of, 119–120 interpretation and, 54–55 price patterns, 58–62 resistance and support, 60–61 steps of, 57

stops, placing, 60 study of, 55–56 See also indicators

technology stocks, 170 “tech wreck,” 121, 161, 177

Ten Commandments of Trading, 13–16 time frames

fake-outs and, 140 moving averages and, 64

tops, picking, 165–167 trade, description of, 54 trader’s law of physics, 2 trading as job, 95–96

INDEX

TradingMarkets.com, 218 trading ranges, 80–81, 82 trailing stops, 91, 104–105 trend channels, 79–80, 81 trend lines

description of, 75 high to high, 76–77 high to low, 77–79 low to low, 77

potential areas of significant force and, 75–76 regression type, 79, 80

short-term, 149

trading ranges, 80–81, 82 trailing stops and, 91

trends, 55, 67–70 trend trading, 144 two-sided trades, 183 2-to-1 rule, 100–103

unbreakable rule, 16 underestimating learning curve, 9–11 University of the Market, 192–193 unrealistic expectations, 99

uptrend, 67, 81–82

Veritas Software (VRTS), 84, 85, 169 volatility

fading and, 138

first quarter of 2001, 121 judging, 94–95

of Nasdaq, 163–165, 172–175 stops and, 105

trading in, 107–108 volume

bar charts and, 82–83 fading and, 138

wanna-bes, examples of, 10–11 web sites, 217–219

wedge pattern, 156 weekly goals, 96–97 well-executed trade

capital preservation and, 115 losing position, adding to, 112–114 losses and, 115–116

overtrading, 112 steps of, 115

systematic vs. discretionary trading, 114

timing and, 110–111

W or double bottom pattern, 87–88, 158, 159

Yahoo!, 27

Yahoo.com, 219