How Day Trading Works?

• Day Traders make profit from volatility.
• When stocks are moving we can find opportunities to trade and profit.
• Our job is to find volatility in the market by hunting for catalysts such as quarterly earnings, press releases, and other types of news.
• A good set up means that we are confident to loose nil or very less money on the trade setup.
• A good setup means a $100 trade can make $300 profit. This is called 3:1 profit to loss ratio.
• A bad setup means a $100 trade can make $10 profit is called negative risk to reward ratio.
• Always hunt for volume and volatility.
• Find stocks and decide on exact entry and exit levels completing the setup for each trade
• High trade means more commission to the broker
• High trade means more losses due to slippage. For example, we exit on $5 but order filled in on $4.9. So 10 cents for 1000 shares is $100 dollars.
• One popular strategy is Pattern Trading
• Over 60% of the volume in the market is Algorithmic High Frequency Trading (HFT)
• Focus on Retail stocks that involve actual traders and on actual news. For example, an FDA approved drug notification.
• So always look for a catalyst that can drive the price up.

Pattern Trading / Gap and Go / Momentum Strategy

• When price action is plotted on a chart, patterns are formed
• One recommendation is to use Candle Stick Charts
• Each Candle represents a period of time and we can choose which time frame we want on our charts
• Better to use 1 min and 5 min candle stick charts