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

Hotkeys are key commands that can be

Most of the day trading strategies I use require high-speed trading. In day trading, the market can move very fast, especially at the market Open. Stocks can very quickly hit your entry or exit price, often in a matter of mere seconds. In order to be able to day trade effectively, it is important to use a trading platform that offers Hotkeys. For high-speed trading, you should have all of the possible trade combinations in your Hotkeys. In my opinion, it is almost impossible to day trade profitably without using Hotkeys .

The following Figure 5.4 is the list of my Hotkeys in my DAS platform. Other platforms may use different scripts. It is best to check with your broker and trading platform support team to make sure you are familiar with how to write a proper script for your Hotkeys.

Figure 5.4 - A chart showing some of my Hotkeys for my DAS Trader platform. A complete detailed Hotkeys script of my platform can be found on our website at www.BearBullTraders.com

For a long position (you’ll recall “buying long” means you buy shares at one price and hope to sell them at a higher price), my buy orders are in blocks of 400, 200 and 100 shares. I use a marketable limit order to buy at the ask price + 5 cents. My “sell” Hotkeys are marketable limit orders to sell my half or full positions on the bid price - 5 cents. When selling, I will accept the bid price and a price no more than 5 cents lower, to ensure my order gets filled immediately. The DAS platform will automatically calculate what half of my position equals in number of shares. The computer will also calculate the current bid and ask prices and place my order at the price I specify.

Similarly, for short positions (you’ll recall “short” is when you borrow shares from your broker, sell them, and hope to later buy back the shares at a lower price for return to your broker), I short sell on the bid price or on a price no more than 5 cents lower. My “buy to cover shorts” Hotkeys are marketable limit orders to buy my half or full positions on the ask price + 5 cents. I am willing to pay higher prices (up to 5 cents) to asks, just to get my orders filled immediately.

You may have noticed in Figure 5.4 that I have different Hotkeys for when a stock is in Short Selling Restriction (SSR) mode. An SSR is triggered when a stock is down 10% or more from the previous day’s closing price. In that case, regulators and the Exchanges restrict short selling of the stock when its price is dropping. You can only sell short on the ask, you cannot sell short directly to the buyers (on the bid). It means that the priority for selling is for the sellers who currently hold positions, not for the short sellers who are wanting to profit from the downward movement. If you want to sell short, you have to queue up on the ask side and wait for buyers to come to you. Real sellers, on the other hand, can accept bids from buyers and get rid of their positions.

The SSR is designed to give the real sellers, who own the stock, a priority to sell over the short sellers on the market. Therefore, when a stock is in SSR mode, I send my orders to sell on the ask, and then I must wait until my orders get filled. I cannot use a marketable limit order for short selling when a stock has a short selling restriction placed on it. If you are interested in reading more about SSR, an online search will direct you to a good number of resources.

The most important advantage of these Hotkeys is that when a stock suddenly moves, you can press your Hotkey to sell your full or half-position on the bid without having to type in the new bid price or your number of shares. It is impossible to consistently profit from day trading without mastering Hotkeys. Part of your education includes trading in simulators for a few months, and during these months you must master your Hotkeys. I have made many mistakes while using Hotkeys and you no doubt also will. That is part of the learning process in day trading. That is why it is extremely important to practice in real time simulators and practice with Hotkeys while you are mastering a trading strategy. Hotkeys are an amazing tool, but they must be used with caution and with sufficient practice to prevent errors. Day trading is difficult enough; don’t let your Hotkeys make it even more difficult.

It is very common to make some mistakes when you are getting used to Hotkeys. When I was learning to use them, I had stickers on my keyboard to help me to keep track of the different key combinations. When I define new Hotkeys, I will ensure that I only practice with them in my simulator account. It takes some time, but eventually you will remember your Hotkeys and use them efficiently. Another important reminder is to always use a wired keyboard that is plugged into your computer. Wireless keyboards can send repeat keystrokes, errant keystrokes, or can fail to send orders at all, especially when low in battery power. This could impact and quite simply mess with your trading. I have seen traders in difficult and costly situations because their wireless mouse or keyboard was low in battery power and did not work properly. I even keep one extra keyboard in my office, ready to go, just in case something happens to the keyboard I’m using. One time I spilled water on my keyboard while trading. My keyboard stopped working. Fortunately, I did not have any open positions at that moment. I immediately purchased two new sets of keyboards and mice and I keep one set as a backup next to my trading desk.