The Compleat Day Trader Trading Systems, Strategies, Timing Indicators, and Analytical Methods Jake Bernstein Lora of Congres Caltoying in Pabtation Dats ert ec. as "cyl dey tender: masionsnteny, ste, Ka, indir ind eeepc anthony Tae Bc Acie ind ‘push 6 3995 by Whe Beata aera Prine i he Und ‘Sole Sct Rl eget Ln Save Crght of pany meats ar Sto nsdn rarer orl cos WaT poe ee Pecan pits en ISBN 0-97-009251-4 ‘hesamarig adr te ut ey Cant ling sperma Can EcSicand de pd rouse a aon. rbot Ei. i fh as Pon Bak Gap omer Prva subnet Wy Qbear ® Toe Bonk pte om meee aid-oe pop cela 08 pst NoGany- il sae semble at pes ty daa owe 2 pre tole prmlna hv gre n cps ttn pogrom. fr cure oe Sat pha fe Doar pc SA a Contents Preince ue Adknoniedgments xi sntroduetion ‘Tue Fort Bediod Laceased Vallhy 1 ‘The Crmputer Revolution and Trading 2 Aavmnces i Sureet Quotation Spares, 3 The international an Permelic Palucal Backdrop 3 Uesponstoliios and Goals a Ine Day Trader 8 ‘About hie Book Beware of val Tales 5 Stho Succeeds and Who Fils Qualities for Success 5 ‘Whit The Bool Gannoe md Wl Nat Door You & No wsaggerated Clams 10 Povour Own Heasareh 40 Gating Started 14 ‘Waid Lona vutures Trading 12 1. The Bastes Definition of Terme 13, 2. Wht a Day Teader tx and Wust a Day Trader Doce What Boos a Tg Tender Trude? 18 rr} 38 i contents 9. The Iluslon af System Testing System Develapuscac 23, Waariea trading System? 26 hats et? as Muntcta Change—Market Porelyuste Change 20 Sirirg toe Sclutens 27 Freroke avril InteMgerce | 27 Tmplcations for the Futire 39 |. Day Trading with Moving Avcrages Moriag average Basins 30 rauidona Movang Aveoye: Syonems: Assets and sbi, Moning hverage CronemerePoce vraus MA Moog Sowrogr ag Support aad Reselamen | $8 5. Intraday Application of Stockastioa ng Slornsatios Quicely and Simply 49 “he baale Sider eestor 4 Basie apprenehes fo SUTrowag 43 Intraday Stochastic POF: Defonsion 47 Sharanucters 48 Markets in Which SP Works Well 52 Hicand Rio Trading Thing te SP 82 Yariaton om ie Thee el SP 8S ‘Whine Yon can Expect 5a Prefered Workeieter SP Applicaton 55) 3. ape, Gaps, Gane Uap Tending Rules and Detttans 58 Sie Observations aboot ihe Gap Technique 65 Get Some Eaperienee 70 Gop Sloe and Penetration Size 71 Witt Yeu Cau Realstealy Papert. 71 [New Last Word sbost Slop Ordre 72 . Support and Resistance: the "MAC" the Moving average Chowne 74 How Supper! tnd Recmtance Doveop during the Day 78 Determining Ped, Suppate, and Reciamerce 74 ‘racing yatboe ae Establiied rend 20 Ensting PonilonaTughe of Wang 80, Stdniys Trea Teadiig —Treding within tbe Chanael 2 ‘Aow Precautions and Suggestions 8 Sag cis Channel Technique si Ouser Methods 64 Enaaton of he MAC ‘Using Wilder's RSI for Day Tradiog Decnyg be Pre Deriatte, 28 [Rates 2 Day Yeading oth the RSI 89 23, 30 87 ©. Using Intraday Momentam 10, Rate of Change in Day Teading 12, Intraday Chimne! Breakout ot tae Channel Breatiout System Works 108 12, Teaditione! Methade nf Techntest Analysis and Day Trading ‘Tend une Anaya 11 ‘Tren Lite Appictlons—hart Formations, 115 19, A Unique Oselllator for Day Trading pens verona Clones 123 ‘Ehnecrucdon ofthe O/C Toe mtreday Taguig 128 14, Soniping the Markets Way Sealping® 151 Rule forseaiing 132 ‘Siugerted Methods of Sealping | 382 ‘Buyin nto Large Declines or GeRing into Large Rales 130 18, Importance of Order une You Should Xow abort Merket Orders LAL Markcell-Toorve I te Hicersamyron)Oraere 14S ‘Stop Orders 143 Slop Lunt Ordese 14 BiontTU-taneeied GTC) Orcers 144 Ope Canals the Deber (000) 144 Doing Ordere Your Atvanlage 14 16, How Seasonelity Affects Barnet Defining Fry Seasonal Dares 148 How to ive tue Rey Seasonal Dave Teeneioa 19, Bey Semen Tendencies 160 17, intraday Spread Trading Prevehstins The Key to Prilabe Spread Dry Tracing 163, Melons of Spresd Day Trading 10% ‘What You Ca Realitealy Expect 160 18, The Conncentive Closes System Deftotinsind Signs 170 Bow te CU Syocean Opeentes 172 aa aaa 130 a fer 16a 170 wi Contents 10, Sentiment Reigne Supreme Delning Seatinent 176 ‘Rvaily Sentomen ex—ideal fr ShorL-Tesm Trading ‘Rill Hstoreel Overton 77 ADSL Day- Trading fppication 178 Sisualtmg Market Sonteoert Reladonstans 178 The impertonee of Market Seutunent 178 DStHisteriet Dats 185 20, Critical Time of Day (CTOP) Basic CTON Sigialn nd Verametere 169. pe and Seggeatine or Using CTO TBS 21. Putting tt aD Together 29, The Peyohology af Day Trading A Sueeessink Pay Tratha Needs Dusipine 186 23, The Impact of 24-Hour Trading on Day Trading 24, Twenty Keys to Success Day Trader Appendte. Formulae 178 186 aor 197 207 an 220 Preface Kor many years, fonzres traders have been fascinated with the idea of day trading. Increased market volatility has created large intradsy price swings which, in tum, have provided numerous epporrunities fer the day trader Tn addition 1o the increase in opportunities, the wide availabilty of relatively low-priced computers and soffsare hag helped narrow the ‘gap between the professional day trader and the novice. The bok you are about to evad contains many different methods of day trading. Take the time to learn, study, and track the mnethosts. Then, arler you have lestned the techniques you vant to use, begin trading, But dont plunge in before you have spunt wore time learning, the methods. (One last paint before you bugin your reading. Do nol believe for even cone scwund that Jay trading fe wags. Day Umding may, i fact, he more difficui than position trading, In the fal snalysiv day wading Is not the proverbial “piece of cake” thats many traders seek. [t anyone tells yout that yon can day trade your way to riches with little effort they're wrong. Day ading lakes work, work, and more work. If you do the work, you'll eeap the rewards, [ts thal simple and its that complicated, Twish you success ia your venture, LL | can be of assistance, please cal cor write me, eke Berestein Acknowledgments | wish to extend a special word of thuiks tu Cummodity Quote Graphics of Glenwood Springs, Calonadu, for permission to reprint charts from theiz outstanding quotation, ‘graph:cs hardware and soltwrare program, SYSTEM ONE. I have bean a COG customer for many years and tind their services quttanding as well as especially useful for the purpose af day trading. Tam alsa imdebted to Mr, Bill Crnz of Omege Revearch in Misuni, Hlorida, or inv assistance and permission to use reperts generated by Jhis excelent analytical and testing sortware programs, TradeStalion ant Systeeniriter, Both programs make the job of historical testing and tain development enjoyable and efficient. (Naturally, I owe considerable tanks to the many traders I've knows Hhrough che years who have contributed ta my knowledge of Ue anar- Ikels. You all nn wha you ave ve loarued from each and every one of YoU, My list i far too lengthy fy include heze; however, | am thankful to all who have touched my life with their upicions, suggestions, systerns, ‘methods, and timing indicators My hard-working office staft must also 9¢ commended for their efforts in the piodcsion of this hook. | am not casy tu work with. | change my mind toa easily and too quickly although all \wrns out well im the long run. Special thanks to Linda, Denise, and Rob. Patrick gebs an extra note of thunks for editing ond pasting up the manuscript. And, ‘of course, thanks 49 Chis for his progratmening work.