Guerilla Investing

Guerilla Investing: Winning Strategies for Beating the Wall Street Professionals is a book intended to help amateur investors survive and thrive against the professionals in the financial markets.

The main ideas in the book are:

1. attack the professionals' weaknesses,

2. avoid their strengths,

3. fight on terrain where you have the advantage over the professionals,

4. finding niches that the professionals miss, and

5. using your smaller size as an asset where the professionals' larger size is a liability.

This week, I’ll highlight some of the ideas from that book.

...cont'd tomorrow...

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Skipping out this week

I will not be posting any articles to this blog until next week because of the holiday this week.

I'll be back next week.

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Enter at 10am, add at 2pm, exit next day at open

Cont'd discussion about Electronic Day Traders' Secrets: Learn From the Best of the Best DayTraders.

Jonathan Petak Interview

At 10 o’clock NY, he starts building a position in a stock.

If at around 2pm it is profitable, he adds to the position.

If by the close the position is still profitable, he holds it overnight, but if it is not profitable, he exits the trade.

The next day, at the open, he exits his long positions as prices are moving up and exits his short positions as prices are moving down.

...back next week...

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Trade stocks that are unusually active

Cont'd discussion about Electronic Day Traders' Secrets: Learn From the Best of the Best DayTraders.

Brad Fredricks

Trade stocks that are more active than they normally are.

If you follow the top 10 abnormally active stocks (not merely the “most active”) everyday watching how they move throughout the day, you are going to make money in the long run after you learn how to trade them (from watching their intraday pattern).

...cont'd tomorrow...

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Make a little and leave

Cont'd discussion about Electronic Day Traders' Secrets: Learn From the Best of the Best DayTraders.

Jim Shaw Interview

The biggest turning point in his career as a day trader was when he decided not to try to make a lot of money, just make a little money and walk out.

...cont'd tomorrow...

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Crowd psychology

Cont'd discussion about Electronic Day Traders' Secrets: Learn From the Best of the Best DayTraders.

James Crane-Baker Interview

Day trading stocks is all about crowd psychology.

Don’t try to get big profits everyday, just small profits consistently.

...cont'd tomorrow...

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Buy on dips with stop-loss, let winners run

Cont'd discussion about Electronic Day Traders' Secrets: Learn From the Best of the Best DayTraders.

Tom Hendrickson Interview

Let winners run; cut your losses. Bet only a set amount on any one idea.

If a stock is in an uptrend, buy it on the bid on a price dip with a stop-loss in place and let it ride until the trend changes.

...cont'd tomorrow...

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When you get profits, don't give much back

Cont'd discussion about Electronic Day Traders' Secrets: Learn From the Best of the Best DayTraders.

Steve Girden Interview

If you give back 20% of what you’re up for the day, cut down your position size. If you give back half of your profits for the day, cut down even more.

There are 20 trading days in a month. On about 17 of them, you play for singles and doubles. Then on 3 of those days you might get a triple or a home run. Don’t look for a home run every day because it won’t happen.

...cont'd next week...

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Start your daytrading day by looking at a day bar chart

Cont'd discussion about Electronic Day Traders' Secrets: Learn From the Best of the Best DayTraders.

Marc McCord Interview

Start the day with a chart showing daily bars of the last 3 to 6 months of a stock you are interested in trading. Notice the tops, bottoms, support and resistance prices. Look for same sector sympathy and same sector divergence.

Follow the one-minute chart of the stock index futures and the bond futures. Together, they indicate the direction of the overall market.

The correct time to bid is when the stock is making a higher low, buying on the bid into a pullback that is in an uptrend.

Decide how much money you are willing to risk losing in any trade and stick to it. Never let a profit turn into a loss.

Be quick to take losses and slow to take profits.

...cont'd tomorrow...

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Buy on pullback to support

Cont'd discussion about Electronic Day Traders' Secrets: Learn From the Best of the Best DayTraders.

Eric Froman Interview

Knowing the levels (the support and resistance prices) is of the utmost importance.

When a stock is going up, wait for it to pullback to a support level and buy it there. Then after buying it, sell when it goes up to take profits.


...cont'd tomorrow...

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Focus, then take and protect profits

Cont'd discussion about Electronic Day Traders' Secrets: Learn From the Best of the Best DayTraders.

Marc Sperling Interview

Focus on just a few stocks, the most active ones of the day.

Consistently take profits when you have them, and don’t let losers go against you by much. When you have a profits part way through a day, don’t give back more than 20% of those profits.

...cont'd tomorrow...

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Buy low, sell high

Cont'd discussion about Electronic Day Traders' Secrets: Learn From the Best of the Best DayTraders.

Roy Sidikman Interview

When everybody is panicking out, he is looking to buy on lowballs and when everybody is chasing price, he is offering to short sell at highball prices.

He buys strong stocks on pullbacks and sells them on rallies.

Another method he uses is to dollar-cost average into a position. For example, if Dell is strong but now pulling back, he’ll bid 1000 at one level and another 1000 at another level. When it stops falling and starts going up, he’ll try to buy 2000 or 3000 more. When the stock runs up, he sells half the position right away and ride the other half up to see how high it can go.

...cont'd next week...

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Buy stocks holding steady when stock index futures are falling

Cont'd discussion about Electronic Day Traders' Secrets: Learn From the Best of the Best DayTraders.

Serge Milman Interview

Watch the stock index futures. When they are down, but your target stock is not going down, start building a position in it because when the futures index turns up, your target stock will go up. Vice versa, when the stock index futures are going up, but your stock is not going down, start building a short position in it because when the futures index turns down, your target stock will go down.

Be confident. When you’re confident, you try to hit home runs and succeed in building a big position and nailing at big price move. When you’re not confident, it’s like driving with your foot on the brake.

Look for news to trade: stock splits, earnings reports; upgrades and downgrades.

...cont'd tomorrow...

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Lowball longs, highball shorts

Cont'd discussion about Electronic Day Traders' Secrets: Learn From the Best of the Best DayTraders.

Randy Guttenberg Interview

If a stock is in motion, don’t jump on it. Instead, lowball it by entering a buy order below the current bid price so that if the price pulls back you buy it. Do not take the ask price. This will allow you room to hold onto the stock if it first moves adversely before going profitable. Also, it allows you to have a bigger profit. Don’t be afraid of missing out on a profitable trade.

Before trading, prepare a list of stocks you are interested in buying and that you are interested in selling. Then watch the stock index futures. As the stock index futures go up, enter lowball orders to buy below the current bid price on stocks you are interested in buying. As the futures go down, enter highball oders to sell short above the current ask price on stocks you are interested in shorting..

...cont'd tomorrow...

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Best point to enter a trade

Cont'd discussion about Electronic Day Traders' Secrets: Learn From the Best of the Best DayTraders.

Andrew Friis’ Interview

The best point to enter a trade is when price action comes to a crescendo at a point where the buying and selling action has leveled off.

...cont'd tomorrow...

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Day Traders' Secrets

Here’s a book with an interesting title. Electronic Day Traders' Secrets: Learn From the Best of the Best DayTraders. This week I’ll be discussing that book.

The book is comprised of thirteen interviews. The interviewee’s are all either students of Tradersedge.net or customers of Broadway Trading, LLC. The interviewees were making money day trading stocks at the time of the interviews.

...cont'd tomorrow...

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