Trading Questions Answered
- What is the best indicator and how do you use it?
Keep in mind that there are absolutely no holy grail indicators. Rather, indicators are used to confirm price patterns and assign probability to what we’re looking at via price setups.
My favorite intraday indicator is the VWAP, the volume weighted moving average. The VWAP represents the average price of all buyers and sellers in the stock that can be used as a line in the sand. For instance, when the price breaks below the VWAP, it’s a great place to short.
But it’s important to keep in mind that ultimately price is what pays. Our focus should be on price action, price patterns, and trend. Indicators are only aligned over price to weigh the probability of the trade.
- What should you do if you can’t get shares to short?
When you want to short a particular stock but the broker doesn’t have the shares available, you can’t take the trade. If you have a really good broker, they might be able to cover 99% of the stocks out there. You can also check with good brokers to see if they have it. If they don’t have the shares they will label it as ‘HTB’ or Hard to Borrow. But for a certain price, these brokers will find these shares at clearing firms and get them for you. Here is a how to guide to shorting stocks.
- Do you use hot keys when you trade?
Hotkeys can be confusing and time consuming. I have buttons laid out that says 100 shares, 200 shares, 500 shares, and 1000 shares on them. These buttons are neatly set up so that I can trade them even faster than hot keys.
Here is a Screenshot of my trading screen.
- How do you determine which stocks are the hot stocks?
The buzz! The hot stocks of the day can usually be checked premarket. I check for earnings, PR, and stocks that are gapping. Then I investigate what’s happening. What’s the news? How does the chart look? The characteristics that make a hot stock are chart breakout, a PR breakout after basing, high relative volume, and low float. The hot stocks will really move when you have not only the right technicals, but the right catalyst as well.
- Do you recommend swing trading or day trading for new traders?
I recommend swing trading for all traders, mainly because its easier. You’re analysis is similar to day trading, but you have more time to think. For swing trades, you have 4-5 days to think about the entry, the stop, and the first target. The same rules apply for day trades, but you have only 5 seconds to make those decisions.
Also, day trading is like any other job. You have to work every day to provide consistent income. But you also need to save for retirement, such as swing trading low cost ETFs and other index funds. Compounding interesting is a powerful concept, but it doesn’t exist in day trading. In long term swing trading you can add shares and build into your position. That way your return on these investments will also compound.
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