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The Truth About Day Trading Stocks: A Cautionary Tale About Hard Challenges and What It Takes To Succeed



The Truth About Day Trading Stocks: A Cautionary Tale About Hard Challenges and What It Takes To Succeed

Josh DiPietro

ISBN: 978-0-470-49585-8 May 2009 208 Pages


The Truth About Day Trading Stocks

A realistic guide to day trading today's stock market

In terms of the potential for heavy financial losses, day trading is a high-risk profession. No one should contemplate day trading without giving thought to the ways he can lose, and all the ways to lessen or avoid them. Yet many people enter the game with unrealistic expectations, unaware of what it takes to succeed. Seminars and software alone do not make a successful day trader, cautions author Josh DiPietro. Instead, a trader must learn hard lessons of self-discipline, consistency, and staying in the game for the long haul to have a real chance of success. In The Truth About Day Trading Stocks, DiPietro offers the amateur day trader a brutally honest look at the pitfalls of day trading—and how to hopefully avoid them.

Written in an engaging and sometimes humorous tone, The Truth About Day Trading Stocks draws on the author's own experiences as a day trader to offer a clear-cut departure from typical "golden goose" strategies promising instant wealth. Instead, he attempts to slow down the dangerous fervor of the average amateur and demonstrate the ways you can become a professional and not lose your shirt in the process. The Truth About Day Trading Stocks shows how trading decisions are bent and shaped by emotions, and why it is critical to know yourself, understand risk, and remember that increasing your skill level is a gradual, ongoing process—there's always more to learn! After dispensing with popular illusions, DiPietro proceeds to offer realistic, practical trading advice—comparing pay-per-trade with pay-per-share brokers, determining which works best and when, offering suggestions on how to avoid the prospect of perfect trades turning ugly, and more. At the end of the book, he also includes a section called "Rules to Remember," a list of over eighty rules, simply stated and easy to grasp, to benefit amateurs' performance.

Throughout the book, the author describes his development of acute self-awareness while figuring out how to succeed. Through that blunt self-portrayal, the goal of The Truth About Day Trading Stocks is to help you create a disciplined mind-set and apply it to your own successful trading style.



Introduction: The Wholehearted Amateur.

PART I Psychological Truths and What to Do about Them.

CHAPTER 1 Truths about Yourself to Know First.

How Often Do You Trade, and How Profitably?

How Much Are You Trading in Capital and Leverage?

How Long Have You Been Trading?

What Financial Instruments Are You Trading?

Are You Trading Other Peoples' Money or Your Personal Capital?

Are You a Licensed Trader, or Trading Independently?

How Were You Trained?

Rules to Remember.

CHAPTER 2 How Emotions Can Destroy a Trade.

The Fear Factor.

Greed Is Not Good.

Rules to Remember.

CHAPTER 3 Preventing Overconfidence.

Ignoring Your Predetermined Stop/Loss Price.

Holding Too Long.

Rules to Remember.

CHAPTER 4 From Impatient to Cool, Calm, and Collected.

The Waiting is the Hardest Part.

Deciding to Learn More.

Rules to Remember.

CHAPTER 5 Taking Breaks.

Break When Your Confidence is Low.

Break Because It's Just Not Working.

Break and Then What?

Rules to Remember.

PART II The Truth About Your Risk.

CHAPTER 6 The Importance of Risk Management.

The Amount of Trading Capital Allocated to Each Trade.

The Timing for Allocating Capital to a Trade.

Overexposure to Risk.

The Stock or Company You'Re Trading.

The Time of Day You're Trading.


Rules to Remember.

CHAPTER 7 Why Overexposure to the Market Can Hurt.

Time versus Timing.

Rules to Remember.

CHAPTER 8 Budgeting: Knowing Your Financial Limitations.

Don't Quit Your Day Job: Catch-22.

Crunching the Numbers.

Cushion Cash.

Rules to Remember.

CHAPTER 9 Minimizing Your Risk with Stop/Loss.

Making Stop/Loss Automatic.

Rules to Remember.

CHAPTER 10 Averaging-Down: A Skilled Strategy.

To Average-Down Successfully Takes Mastery.

Know-How Doesn't Grow Overnight.

Rules to Remember.

CHAPTER 11 Gambling versus Day Trading.

Rules to Remember.

PART III Intraday Trading Truths.

CHAPTER 12 Why Some Traders Make More Mistakes.

Pick Your Stocks Carefully.

Focus, Focus, Focus.

Pay Attention to Market-Moving News.

Rules to Remember.

CHAPTER 13 Trading Consistently All Day.

Rules to Remember.

CHAPTER 14 Stock Picking: Simplifying the Process.

Your Stock Should Have an Average Daily Volume of One Million Shares or More.

Choose Stocks between $10 and $100.

Pick Stocks That Display Tradable Intraday Price Swings.

Don't Trade Stocks Affected by Strict Federal Regulations.

Beware of Stocks Directly Affected by Current News Headlines.

Rules to Remember.

CHAPTER 15 Why News Can Be Just Noise.

Trading on News versus Monitoring News.

Rules to Remember.

PART IV The Truth About Training and Preparation.

CHAPTER 16 About Those Training Programs.

Seminars for the Greenhorns.

Training Programs for the More Experienced Trader.

Tips for Selecting the Right Program.

Rules to Remember.

CHAPTER 17 Picking the Right Online Broker: Pay-per-Share versus Pay-per-Trade.

Starting Out with Pay-per-Trade.

Transitioning to Pay-per-Share.

High Leverage Pros and Cons.

Hang on to Your Pay-Per-Trade Account.

Rules to Remember.

CHAPTER 18 Paper-Trading Strategy.

Paper Trading for the Amateur.

A Word About Advanced Paper Trading.

Rules to Remember.

CHAPTER 19 Trading for Skill versus Trading for Income.

Building a Foundation of Trading Skills.

First Level.

Second Level.

Third Level.


Rules to Remember.

CHAPTER 20 The Perfect Trading Day.

Early Morning Activities.

Pre-Market Trading.

The Opening Bell.

Midday Activities.

The Last Hour of Trading.

The Closing Bell.

After-Market Trading.


CHAPTER 21 The Worst Trading Day.

Early Morning Activities.

Premarket Trading.

The Opening Bell.

Mid-Day Activities.

Last Hour of Trading.

The Closing Bell.

After-Market Trading.


Conclusion: Parting Words.

Appendix: Rules to Remember.

About the Author.