How to Day Trade for a Living: Tools, Tactics, Money Management, Discipline and Trading Psychology

For some strategies, you cannot find stocks in the pre-market. The Momentum, Top Reversal and Bottom Reversal Strategies explained later in this book are the types of strategies applicable for when a setup suitable for trading happens during trading hours. It is hard to find these stocks during a pre-market scan watchlist. For these strategies, I have specific scanners that look for these stocks and I will explain these scanners in detail in the next section .

During the day, there may be some new Stocks in Play in the market that did not present as such when I was building my morning watchlist. Figure 4.3 below is a screenshot of a scanner on my Trade Ideas software that is set to find real time stocks for me that:

I will also take a look at the sector of stocks. If I have a few stocks in one sector, there is a good chance that these stocks are not in play. They have high relative volume because their sector is under heavy trading by institutional traders. It is important to know that stocks usually trade with their sector. For example, when oil stocks are selling off, almost all of the oil companies sell off. Therefore, it is important to recognize Stocks in Play from the herd. Remember, you are only as good as the stock you trade, so if you are the best trader in the world, but in a wrong stock, you will lose money.

For the Momentum Strategy, as I earlier explained, you need to find low float stocks that are moving. You cannot find these stocks unless you are using a good scanner. For a scanner, I use Trade Ideas software www.Trade-Ideas.com . Please check our website for the Trade Ideas link and information on a discount exclusive for members of our trading community.

In Figure 4.4 above, you can see how I am scanning real time for my Momentum Strategy. During the day, the scanner is finding stocks that have high relative volume, low float, and high activity. I then check them in my trading platform and decide, based on my Momentum Strategy set out in Chapter 7, if I want to trade them .

As you can see, I am scanning the market real time to find stocks that are selling off or surging up so I can trade my Reversal Strategies.

I won’t go into the details here about how to make these scans, but I will explain in Chapter 7 under each strategy the specifics of what to look for in stocks in each category. If you develop new strategies for yourself, you can also define new scanners for yourself. These scanners are highly adjustable and you can change the parameters as you like. These are the parameters that work for me, but as you gain experience and learn more about other strategies and your own preferred trading style, you may very well decide to define new scanners for yourself.

Many new traders don’t initially need a scanner. Some day trading communities will let you observe their scanner in real time. These scanners are costly, so at the beginning of your career transition to day trading, you will probably want to keep your expenses down as much as possible.