Before I dive right in here’s a quick background on my journey into trading and how I ended up in www.tradeonthefly.com with Michele aka @Offshorehunters
My name is Psycho, but my friends call me Jesse.
It started back in the summer of 2013 (I don’t know if you would actually call it trading though) mostly out of curiosity than anything else. I was always interested when people spoke about it, but I knew nothing about nothing so I never knew where to start, until one day my neighbor (everyone has a neighbor story when it comes to stocks) mentioned he opened up an etrade account, so I thought well if he can do it I can do it, and that’s how I got started.
The first couple months was just buying things that were going up and it was mostly biotech even though I didn’t really know what biotech was at the time. No charts, no Level 2 quotes, no fundamental or technical information whatsoever, my basis was that if other people were buying it I should too.
I had some great success with this ironclad strategy, but also some not so great success and on a minor tangent I think that’s why a lot of new traders experience that “beginners luck” because they keep it simple, it’s the only way they know how.
But for time’s sake I’ll summarize the next year:
I doubled my money in biotech by October
Dumped it all into pot stocks in the OTC in December
Lost half by the start of January
Proceeded to make just under a half million by March
Proceeded to lose 90% of that by August
Realized I literally didn’t know what I was doing, then ADMITTED I didn’t know what I was doing (big difference between the two)
Reached out to Nate at @InvestorsLive and signed up for www.investorsunderground.com and beat @elkwood66 over the head until he would talk to me so I could ask questions.
Action in the momo room was a little too fast for me at the time so I saw there was another room.
This is when I met Michele in the swing room and she let me know it was ok to slow down, take my time and learn by developing good habits and re-programming the way I would see things.
Proceeded to learn by osmosis thru the wise-one herself @offshorehunters and the modsquad: @veritas @autumnalcity87 @canny4 @biaggoazarelli and @bradford98 by presenting my ideas then getting feedback, trying different things out until I found what started to work for me. It was truly a breeding ground for my learning process that helped me develop the style of trading that worked for me.
Which brings us to present day.
So a common question people ask is “How do I trade and work a full time job at the same time?” The short answer is that it’s possible. In fact the majority of my mentors all had a full time job at some point; it’s the balancing of the two and progression of their trading that allowed them to walk away and ultimately trade full time.
The good news is that it’s entirely possible to do both.
The bad news is and the following long answer, is that most people will not be willing to do what it takes to achieve that.
To eliminate this turning out to be a soup-to-nuts article on how to get started as a beginning trader. I’ll discuss some of the challenges I face with doing both, as well as how I have managed to overcome some of those challenges.
Most important areas to discuss:
- Time management
- Swing vs. Day trading
- Trade Management
- Trimming the fat
- End game
This is so crucial to your longevity as not only a trader but being a productive employee while you are doing both, because let’s face it, your job pays the bills and pads the bank account while you are building yourself into a position to where you can trade full time.
Time management is so important because if done effectively it can prevent in my eyes the number 1 challenge with trading and working, and that is burnout and blow up. If you don’t manage your time, you will grind yourself into the dirt. So take heed.
First things first based on your work schedule, when are you able to trade, and not just grab 15 minutes on your lunch and hit buy/sell on some random setups. Because trading isn’t just open market hours, trading is the culmination of your screen time which includes:
- Market hours
- Other research
So if you work 9-5 what are your options, well depends on where you live and the time zone you’re in. To keep this simple I’ll just tell you exactly what my schedule is.
I work in office from 5am-12:30pm PST (8am-3:30pm EST) in office and 1pm-5pm from home (mostly just answering emails and a few phone calls) So I have a busy day, but thankfully I am in front of a computer all day and can check the market throughout the day either on my desktop or on my phone.
My market hours are typically pre-mkt to first hour of market open, last 30/45 minutes of market close and after hours action. I don’t have the ability to watch every tick of every ticker.
I do one giant charting session/scan on the weekend, and I keep my parameters simple everything under $20 with over 100k in average volume over the last 90 days, and this typically brings up between 1800-1900 charts to look at. That may seem like a lot, but once you do it for a while, you get to know a lot of the symbols intimately as well as recognize your chosen setups a lost faster so you can breeze thru the charts in about an hour or so once you get accustomed to it.
Out of this I make a list of every setup I like long, short, swing, daytrade, everything and this is the master list and one I refer back to during the week. Out of the mast list I pick 10-12 that I think are the highest probability setups and those are the core ideas going into the week.
Nothing is set in stone, as things change based on news, mkt conditions, etc., so things may change but it’s the basic game plan I have going into the week and how I feel most prepared.
As the week goes on, I may add or subtract to that list as ideas present or remove themselves, but I refer to that list each night going in to the next session so I have an idea of where everything is at.
Based on this I plug the master list into a watch list in my platform and set alerts, and I have the main ideas up with charts and level 2 below.
The reason why I believe this is important is because it eliminates prep time in the morning, now all your focus is on execution.
I have toyed with the idea of subscribing to a news service, but in all honesty you can get live information on twitter just by following the right accounts, and unless you are just looking to scalp moves or win a prize for being the first to buy, in the grand scheme of things, I think you’ll survive without it.
I’m not a fundamentals trader, but there are several in the twitter finance community that speak fundamentals as a second language and you can find some real gems by reading their feed.
The reason I am talking about this is because when you are working and trading you have to be able to fully utilize the tools you have at your fingertips, especially when you are limited on time.
Swing Trading vs. Daytrading
Honestly I never understood the politics of this outside of the human instinct to place themselves inside a nice cozy compartmentalized section of a social network, in this case the twitter-stocktwits-newsletter finance community.
The best traders I know don’t limit themselves to a style, they adapt and adjust to the market and capitalize on the opportunities that present themselves, nothing more.
But, in this case I’ll discuss how those two styles can fit in nicely while you are working a full time job.
This is actually a great style for those who have the least time to stay up with market action and either don’t want to look at every tick, or don’t have the time to. This style can be over several days, weeks, and months.
- Benefits: You can see clearly defined supports and resistances on scaled out timeframes to carefully plan the trade and be patient with your entry. You can also place sell orders at your desired target sell prices along the way and don’t even need to be at the computer when those occur.
- Negatives: It’s highly effective in a swing friendly market, with a clearly defined trend. We are not currently in a swing friendly market (depending on your risk tolerance) the only trend that is apparent as of late is that it’s been extremely volatile day to day.
I typically use weekly, daily, and 60 minute charts to identify parameters for these trades.
On this chart you can see a clearly defined support line (outside of the flash crash day) at 11.90-12, and a clearly defined overhead downtrend resistance line indicated on the chart above. Resistances appear at 13, 14, 15, and 16.
So for a swing trade personally I would place an early entry buy order around 12-12.10 or I would set alerts for a buy at a break up and above the DT line. I would have my stop at 11.60 but that adheres to my personal risk tolerance.
Personally I find that flagging patterns like the one above have been the most consistent breakout patterns to the long side.
Michele also looks for these and posts the one’s she has on watch in weekly scans, which really comes in handy is you are pressed for time. Not only are you getting ideas from a veteran that has been doing what you want to do for the last 10+ years, but you are getting a glimpse into the way she thinks.
That’s pretty valuable stuff.
This can also work if you are comfortable with extremely volatile emotionally driven plays i.e., momo plays, news driven plays, and short squeezes. If you can identify these early on in pre-mkt and the morning is your only window to trade, there are plenty of opportunities both long and short in a high volatility market or window of the market session.
- Benefits: There are usually 2-3 very good opportunities from pre-mkt thru the first 30 minutes of session activity both long and short.
- Negatives: These are typically riskier plays especially for newer traders as you will need to be extremely nimble, and they can expend emotional capital if you are not accustomed to extreme moves in a very small window of time.
I typically use a 1 day chart to see the previous sessions chart in combination with the current session and I focus on a 5 min 3-5 day, 2, and 1 minute chart.
In this example you can see overhead resistance at 3.80, 4.20, and 4.80. On the long side on a thin name like this you can see a giant volume bar to get the session started followed by a couple more, if you’re quick you could snag a position on the 3.80 break and even add at 4.20 then sell when you see the large wick peaking out at 4.80 which was a previous resistance spot.
On the short side, you could start in at 4.60-4.80 leaving some room to 5. To cover you can buy whenever you have to start your workday, enter a buy on close order, or check on it throughout the day.
So you can see there are two different ways to trade while you work, and a multitude of variations in between.
This can be a very broad ranged topic of conversation but specifically I’m going to address the most common questions here:
“What if you are not in front of a computer or can’t get to one during the day?”
“How often should I check my trades?
“How do I effectively plan a swing trade?”
All of the above are great questions, and basically it all boils down to one thing.
How you plan the trade.
DO NOT EVER ENTER A TRADE WITHOUT A PLAN. It’s a surefire way to not only develop bad habits but put you into a corner and force you to act emotionally.
If you effectively plan a trade, it should take emotions completely out of the process (for the most part).
Let’s take a look at an example:
Here is the hourly chart over the past week:
Has a nice coiling pattern to it and you’re looking at it long. You need to ask yourself “what does the chart tell me?”
It shows you that there is resistance at 11.20 and initial support at 10.40 and 9.60.
In my opinion zooming out will give you a better idea on how to set your parameters for the trade.
So here’s the daily over the last 6 months:
Now what does the chart tell you?
You have the 200sma sitting right at that 9.60 area which indicates a strong area of support, a make or break area so to speak.
But you also have some initial support at that 10.20-10.40 area discussed above.
Now you can see real overhead resistance around 12 and again at 14.
So what now?
You can plan for a couple different scenarios:
If the stock pulls, you now have two areas of support you can reference, 10.20ish and 9.60. Personally I like to see support areas tested with volume for an entry long. I like to scale in partial size and leave room for secondary support, that way if it fails you’re not taking it to the face. If it holds you now have room to add.
If the stock breaks out, similar to above I like to see it break out with significant volume so from the area it’s at now I would want to see a break over 11.20 with volume, or a break of 11.20 and hold for a breakout entry, again partial size so if it goes against you, you stay safe, and if it acts according to plan you can add to a winner.
Depending on what platform you use to trade, you can input your entries the night before or pre market if you can’t be around for the action. So for instance in this example you set a buy for 100 shares at 10.20, and another buy at 9.60ish and a stop at your risk tolerance if the trade fails. Or in the other instance you can set a buy at 11.20 with a stop at support around 11 on the upside.
On the flip side you can also pre-set your sells at your previously planned exit points whatever they may be depending on your strategy.
At the very least you should be able to check your positions once in the morning and once in the evening.
This is an example of how you can not only take your emotions completely out of the trade, but also how to effectively plan for a trade without having the luxury (or burden) of staring at it every tick during the day.
So I will repeat the most important part of this again:
DO NOT ENTER A TRADE WITHOUT FIRST HAVING A PLAN.
Trimming the Fat
To explain further, if you are doing both; working full time and trading, you are effectively working 2 jobs either part time and full time or full time at both.
Trading is a great example of “you get out what you put in” and I firmly believe if you treat it like a hobby you will get hobby results. I’m not saying you need to look at charts or research 40 hours a week, but I am saying that if you go in unprepared, without a game plan you will without a doubt get spanked by mother market.
So how do you trim the fat, for me personally I used to work out for 3 hours a day 5 days a week, and when I was trading full time, that wasn’t a problem, but now that I work and trade, I had to trim that down considerably to 60 minutes 3 times a week, sacrifice now for what I will get back later. That wasn’t easy for me but I knew I had to effectively redistribute where my time capital went.
I also had to maximize the time differently, for example referencing the above, I couldn’t give up dog park time for my baby boy, so instead I do my cardio while I’m at the dog park with him. I started going into the work earlier so I could bang out my morning administration and office boondoggle while market activity was slow.
Just take a look at where your time is spent and do some experiments on where you can add and subtract to get the most bang for your buck until you find a healthy balance that provides you with consistency while not grinding you down to a nub.
Lastly, you have to be aware of where you are at mentally, physically, and emotionally.
If you feel you are wearing yourself out, for pete’s sake take a breather. The market will be here when you get back. I guarantee if you are worn out in any of the above categories your trading will suffer. You have to take care of yourself in all aspects in order to stay on your game. Having planned/scheduled “unplug” times will do wonders for your longevity and I cannot stress enough, the longer you can stay in the game, the better chance you have at survival first, and success second.
You cannot experience success if at first you don’t survive.
One thing that I have found that helps and I am speaking to those that don’t have the time or even if you don’t have the desire to do scans nightly or weekly; is having access to scans that run congruently with your trading style.
In this case if you are swing trading, you don’t necessarily need to do scans nightly, and specifically this is where I think the www.tradeonthefly.com weekly scans come in handy. Michele scans the market and puts out a scan 3x a week with charts that detail the best setups she sees and WHY she feels they are quality setups.
Not only that but she lays out how she will enter the trade based on the triggers she sees on the chart.
In addition, there are quite a few seasoned and veteran traders in the room that I mentioned earlier who also contribute ideas to the room and you have access to daily chat logs to see those ideas as well.
This is a huge benefit to those who do not have the time to do their own homework.
This will be different for everybody, but one thing remains the same. If you don’t have a goal in mind, how in the hell will you know how to effectively plan to reach it.
All of my mentors and truly successful traders in what I consider my circle have that in common, they all have short, medium, and long terms goals, and for the majority of them they don’t have a $ symbol attached. They are all focused on mastering the process, and the $ will come regardless.
Is your endgame to simply learn more and create a supplemental income while you work?
Great, then seek out others who do that and do whatever you can to get them to share the lessons they learned along the way.
Is it to eventually put yourself in a position to leave your job and trade full time?
Awesome, find people who have been where you are at become a sponge.
Everyone’s path will be different but the guiding principles will always be the same:
- Start out slow and steady
- Out of base hits will come homeruns
- Let your winners run
- Cut your losers fast
- Protect your capital by wiring out of your account regularly
Trading is not easy but you can keep it simple.