Guide to Day Trading Strategies

H O W T O D A Y T R A D E
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the price could come right back down. So, the use of hot keys eliminates the delay of manual 
entry. The volatility at the open can allow for huge pro
À
ts if you can trade it properly, but can 
also result in large losses if you fail to act quickly. In addition to using hotkeys for selling partial 
and full positions on the bid or ask, I also have hotkeys for setting automatic stops. I have a 
hotkey that I can press that will set a stop at my average cost or at breakeven (Control+B). I also 
have hotkeys I can press to set a stop loss for my full position -11 cents (Control+1), -21 cents 
(Control+2) or -31 cents (Control+3) away from the last price traded.
When you are 
À
rst using hotkeys, it is a good idea to keep your order con
À
rmation windows 
turned on. It is very common to make some mistakes when you are getting used to them. I 
have stickers on my keyboard to help me keep track of the different key combinations. When 
I was learning to use hotkeys, I would sit with my computer turned off at night, and practiced 
pressing the right buttons. It takes some time, but eventually it will become second nature. 
Another important reminder is that you always use a hardwired keyboard that is plugged into 
your computer. Wireless keyboards can begin to lose battery power can send repeat keystrokes, 
errant keystrokes and can fail to send orders at all. This could result in accidentally repeatedly 
buying shares of a stock until your buying power has been maxed out. Hotkeys are an amazing 
tool, but have to be used with caution to prevent errors. Trading is dif
À
cult enough without 
making technical errors with hotkeys.

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CHAPTER 8
TREND (MOMENTUM) 
TRADING STRATEGIES
Now that you have a solid understanding of support and resistance, basic chart settings, and how 
to select stocks worth trading, I want to discuss 
À
nding your entry. This is where the rubber meets 
the road. We are going to talk about chart patterns and setups, as well as opportunities to enter 
the right type of stock while managing risk and keeping losses minimal. I de
À
ne a chart setup as 
having a safe opportunity to get into a strong stock. You may 
À
nd that some of the patterns we 
review seem a bit obscure, but I assure you that the longer you look at charts, the more obvious 
they will become. When we are trading, we always want to refer back to taking setups that are 
obvious, because that means more people will be likely to buy at the same breakout spots. The 
most important thing to remember about momentum trading is that entering close to support 
will always give you the lowest risk and the highest reward potential. This typically means buying 
near moving average support or at the bottom of a bull 
Á
ag pullback. While buying stocks near 
high of day can work in strong markets, it is also a higher risk strategy. Instead, we will focus on 
pullback entries that occur during the formation of a chart pattern commonly known as a 
Á
ag.
Anytime you are considering taking a trade, you need to make sure you can justify the risk. That 
means you need to understand what the risk actually is. My favorite patterns all have well de
À
ned 
levels of support that we use as the max loss price. If the stock breaks below that support level, 
we take the loss and move on. I will base my position size on the distance between my entry and 
the stop and how much money I am willing to risk in the trade. Once I have established my risk, 
my pro
À
t target needs to be my risk multiplied by two. That will give me the 2:1 pro
À
t loss that 
is critical for long term success as a trader. We have already discussed the added value of strong 
daily charts with lots of triggers and windows, and the importance of a good intraday catalyst. In 
this chapter, we will be applying the chart patterns only to the strong stocks we consider worthy 
of trading. Chart patterns on weak stocks are irrelevant to us.
My favorite strategies are momentum trading strategies to the long side. I love 
À
nding a stock 
during the pre-market session that has a great catalyst with a lot of windows on the daily chart. 
We have seen some incredible moves from momentum names over the years. One of the biggest 
in recent memory was from a stock that opened at $18.00, and hit a high of just over $55.00, 
within 60 minutes of trading. When stocks make those types of intraday moves, it is a reminder 
to never underestimate the strength of the market. As a momentum trader, I am often buying 
stocks that have already made a big move. As an investor, it would not make a lot of sense to buy 
a stock that just moved up 5-10%, but as a day trader, we know we can manage our risk based 
on the intraday support level and try to ride the trend for another 5-10%. It is commonplace for 
stocks under $10 to make 50% intraday moves when a catalyst or high relative volume is present.

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