September 25, 2012
The Real Value of a Stock
 As a professional trader and teacher of thousands world-wide at Cyber Trading University, I am often asked questions like, “What is the stock worth?” It surprises them when I mention that I do not know or care about the value or worth of a stock. I chose all of my stocks based upon one factor and one factor alone: supply and demand. Traders, new traders especially, make the mistake of picking their stocks based upon this supposed “value” or “worth”. They snub stocks that “aren’t worth that much” and ultimately lose out on some very profitable trades. These traders allow themselves to become wrapped up in the thought process of the investment gurus, and are confused about both the function of the stock market and their roles as traders. In order to explain this further, I would like to review (more)…
March 7, 2012
For Traders, Practice Makes Perfect
 In a very familiar old joke, one gentleman asks another, “How do you get to Carnegie Hall?” The second gentleman responds, “Practice.” I believe the same advice applies to the person who asks how to become a successful day trader. The simple truth of the matter is that most day trading systems (at least the good ones) are not terribly complex. For instance, my system is built on the simple premise of follow the [market] leader. It isn’t rocket science – if it was, I wouldn’t be able to follow it! Yet, all too often, my day trading students let the simplicity of the system lull them into a false sense of security. The truth of the matter is that most things in life are simple. It’s simple to swim, drive a car, or hit the perfect golf shot. It’s (more)…
February 2, 2012
Dollar Cost Averaging: Avoiding the Oldest Trick in the Book
 In a previous article, I strenuously warned against the temptation of holding overnight positions. When I give my top 10 rules of day trading “don’ts”, no overnights is Rule #1. A VERY close second is no dollar cost averaging. For those who don’t know, dollar cost averaging is the process of buying additional stock after you’ve taken a prior loss. The rationale for doing so is that, now that the price has been “discounted,” you can buy more of it and therefore, increase your chances of making a profit (or at least breaking even). If you’ve ever dealt with a stockbroker, then you have very likely been introduced to this strategy. Dollar cost averaging is written on Page 1 of the Stockbroker’s Handbook under the chapter “They’ll Fall for It Every Time.” It works like this: Your broker calls and (more)…
January 9, 2012
The Step Toward Becoming a More Disciplined Trader
 In my experience teaching thousands of individuals to day trade, I’ve found that the ultimate determining factor in success is not experience, analytical ability, or risk tolerance. The secret ingredient in 99% of success stories is discipline. Some traders have a naturally disciplined disposition, others develop it over time. Achieving the discipline to follow the strict rules of day trading will not only limit your losses, it will maximize your gains. A few easy steps can get you on the right track, and the first one I always suggest is to never hold overnight positions. The reason traders use the phrase “day trading” is because day traders open and close all positions during the same trading day. In other words, a true day trader starts each day with no open positions, makes trades during the course of that day, and (more)…
December 15, 2011
The Market Maker Gold Mine
 Jon Corzine has recently become the latest U.S. big business villain. Although the demise of MF Global may seem like an event that people in my industry would rather not bring to light, companies like this are important for traders to recognize and be wary of. What many traders don’t know is that MF Global (MFGLQ) was one of the largest market makers on Wall Street. Market makers are important to recognize, as they constantly try to trick traders so they can profit from their mistakes. If you are not familiar with market makers or their roles, these companies are registered to act as dealers in a stock. They buy, sell, and accumulate shares in a stock on behalf of their clients or for their own accounts. They fill both market and limit orders, and provide much-needed liquidity to maintain at (more)…
December 2, 2011
Big Business Catastrophes Provide Significant Opportunities for the Day Trader
 As our country tries to regain balance in today’s increasingly unstable economy, businesses everywhere are succumbing to bankruptcy. Although no one likes to see our economy struggle, day-traders have a unique opportunity to make the best of a bad situation. Earlier this week, American Airlines (AMR) crashed as the company filed for bankruptcy, dropping 88% from $1.62 to $0.20 as scrambling shareholders oversold short. What many day-traders do not know, is that AMR was destined to bounce back almost immediately. In the past 30 years, a trend has developed where stocks of big businesses filing for bankruptcy will come back up an average of 18% within a week of the initial crash. This has proven true for the 20 largest corporations in the United States to file bankruptcy since 1980, according to Bloomberg and Bankruptcy.com. This theory held fast for (more)…
November 11, 2011
Beware of the Market Makers’ Trading Traps
 Trading may be the ultimate “survival of the fittest” profession. No matter how good a trader you are – or how experienced you may be – there are always traders better than you. And, they’re looking to exploit you at any chance they get. I’m most reminded of this harsh reality of trading life when I watch the action on my Level II screens. Day after day, uninitiated traders get deceived – and have their money taken away – by savvy, highly experienced market makers. Most of these new traders naively think just having access to Level II data is all they need to succeed – until they lose thousands upon thousands of dollars or just quit trading out of exasperation. So, with that in mind, let’s look at some of the common tricks market makers unleash on unsuspecting souls (more)…
October 17, 2011
It’s the Overnights, Stupid!
 People often ask me, “What is the single most important personality trait of a day trader?” Almost as often, they are surprised by my one-word answer – discipline. In my experience of teaching thousands of individuals to day trade, I’ve found that the ultimate determining factor in success is not education, analytical ability, risk tolerance or the like. The determining factor in 99.9% of the cases is discipline – the discipline to follow the rules of day trading, the most important of which is NO OVERNIGHTS! It is called day trading for a reason. And, by the way, that reason isn’t because we make our trades during daytime hours. Just about every investor makes his or her trades during the day. The reason it is called “day trading” is because we open and close all positions during the same trading (more)…
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