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Non-Tech : A.B. WATLEY - THE ULTIMATE TRADER!
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To: Jim who wrote (548)1/30/1999 7:30:00 PM
From: Rick Faurot  Read Replies (1) of 2045
 
Jim,

I have read a bunch of books including Electronic Daytrader, Underground Daytraders L2, etc. Most of my thoughts on MM activity and evaluating L2 come from staring at the screen seven hours a day every day and trying to figure out what's going on.

I don't recommend courses as they are mostly unreal expensive and you can put the money to better uses. Spend a month just watching stocks you are interested in on L2. Keep a trading journal and take notes. I do this. Pick out trades and write them down without trying to execute them and see if they work out or not. This can give you a great education for the cost of a month's quote fees. I still do paper trades when I don't feel sure about the action. It is a great way to check out your ideas without getting burned.

When you start trading, have a plan. Decide on which stocks you will focus on and study the charts, the company backgrounds, news etc. Watch the L2 action and look for patterns. They are there and you can find them. Trade small at first. 200 shares is a good starting point. Any time a trade doesn't go your way, sell it (known as "stopping out") instantly. NEVER let a trade go more than 1/8 against you without selling. When your small-share trades become consistently successful, move up to 500 shares. Then 1000 shares if you have the capital. 1000 share trades should be your goal because you need that volume to beat commission costs on scalps. You can make decent money just picking off 1/8s and 1/4s if you are trading 1k lots.

Be conservative. Be cautious. NEVER let a trade go against you more than 1/8 without stopping out. Stick with your plan and you can make it. It's harder than it looks.

RickF
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