Momentum Daytrading - Tricks of the Trade Message Board

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Strategies & Market Trends : Momentum Daytrading - Tricks of the Trade

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To: Ken Wolff who wrote (2026)	9/30/1999 5:14:00 PM
From: Ken Wolff	Read Replies (1) of 2120

I believe daytrading should be taught in basically two phases. One is "why" you trade and Two is "How" you trade. Many daytraders who lose their money confuse the two and put the How before the Why. If you are to survive in this changing market you must have the basic understanding of market dynamics which will allow you to change as the market changes. Let's first define who we are when I call us daytraders. There are many types of traders who attempt to play the market for short term momentum. I have met many of them and I make it my business to carefully track the percentages as closely as possible with as many styles of daytrading as I can. There are basically two types that I refer to as daytraders. One is the trader who plays the slower moves with wide stops mostly using technical analysis and charts and attempt to play the longer term, short term moves that stocks make during the day. Those types of traders will play many stocks hoping for average moves in an inclining market and will water down the profits such that the monthly percentages will necessitate a large portfolio to make good returns sufficient to make a good living. These types of traders generally are playing with larger sums of money in an attempt to make about 5% per month profits. Some do a bit more and some do a bit less. The more that a trader is forced to buy and hold and wait for momentum to carry a stock the more they water down the profits and decrease their overall return. It is common for many to tout big winnings on the few stocks they catch that do run impressively, while you hardly ever hear about the other duds that occupy the days returns. Two is the trader who knows how to play the short term oscillations many strongly swinging stocks make during an active day in the stock market. Many stocks will make 20% price swings in under 10 minutes bringing the timer of those oscillations incredible profits if they know how to time each swing up and down. These types of traders are just as adept at going short as they are at going long and can make multi dollars on a nicely swinging stock under strong momentum. They generally know how to stop out when they mis-time an oscillation and control the losses efficiently, never allowing excessive losses impede their mental resolve to make the next trade. They are just as adept at knowing when "not" to trade and they will back out of a market should it prove to be contrary to their expectations. They carefully track the movements of stocks much the way a conductor tracks the movement of the orchestra as it plays a Mozart symphony. These types of traders can make a living trading a small portfolio and their percentage returns make investing percentages laughable. I will primarily be dealing with the latter of the two daytraders and attempt to share with you the rules and methods that he imploys to trade along with a changing stock market. Ken Wolff www.mtrader.com

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