Numerics
- 1-2-3-4 criterion, securities, 158
- 10-percent strategy, 103
A
- accredited investors, 290
- accumulation phase, trends, 141
- accumulation/distribution index, money flow, 164
- algorithmic trading strategies, 77. See also program trading
- Ally Invest, 267
- American options, 190
- AmiBroker, 228
- amortizing bonds, 52–53
- Andrews, Alan, 147
- Andrews pitchforks, technical analysis, 147
- anger, managing, 255
- anomalies, market
- calendar effects, 170–172
- defined, 169
- anxiety, managing, 256
- arbitrage trading, 33
- convertible arbitrage, 187
- ETF arbitrage, 187–188
- fixed-income arbitrage, 188–189
- high-frequency trading, 77
- index arbitrage, 189
- law of one price, 180
- market efficiency and, 74–75, 180–181
- merger arbitrage, 189–190
- one-price rule, 76
- option arbitrage, 190–191
- overview, 179–180
- price changes, 181–182
- risk arbitrage, 183–186
- synthetic securities, 75–76
-
Art of War, The (Sun Tzu), 259
- assets
- arbitrage trading
- high-frequency trading, 77
- market efficiency and, 74–75
- one-price rule, 76
- synthetic securities, 75–76
- bonds
- listed, 54
- over-the-counter trading, 54
- overview, 52–53
- trading, 53–54
- Treasury dealers, 54
- budget and, 43
- commodities, 56–57
- cryptocurrency, 25
- Bitcoin, 65
- blockchain, 65
- Coinbase website, 217
- forks, 66
- initial coin offerings, 66
- overview, 64–65
- regulation, 283
- risks, 69
- trading, 66–69
- currency, 55–56
- defined, 40
- derivatives
- defined, 40
- futures contracts, 71–72
- leverage and, 89
- options, 70–71
- overview, 69–70
- regulation, 281–282
- trading, 72–73
- warrants, 72
- exchange-traded funds
- defined, 26
- overview, 60–61
- retail shares, 61
- risks, 64
- strategy ETFs, 62
- trading, 63
- traditional ETFs, 61
- forex
- brokers with day trader services for, 272–273
- currency, 55
- defined, 25–26
- leverage in, 25, 90
- regulation, 283–284
- futures contracts, 25
- liquidity
- frequency, 41–42
- volume, 41
- margin
- overview, 43–44
- for pattern day traders, 45
- regulation, 45–46
- options, 25
- overview, 39–40
- stocks, 26
- ask price, 46–47
- bid price, 46–47
- exchanges, 47–52
- ATC Brokers, 272
- at-risk rules, 306
- authorized participants, ETF, 187–188
- automatic trades, 14. See also program trading
- average true range, volatility, 161–162
B
- backing up systems, 252
- backtesting
- comparing results with market cycles, 225–226
- defined, 31
- hypothesis, 224
- program trading, 177
- running test, 224–225
- simulation software and, 227–229
- thinkOnDemand, 270
- banks
- currency trading, 56
- Federal Reserve, 280
- regulation, 283–284
- bars, 134
- bear market, 124, 136
- behavioral finance, 253
- benchmarks, performance, 241–242
- beta, volatility, 30–31, 162
- bid-ask spread (bid-offer), 182, 197
- bills, 52. See also bonds
- binary options, 71
- Bitcoin, 65
- blockchain, 65
- bonds
- amortizing, 52–53
- bills, 52
- convertible bonds, 72
- coupons, 52
- discount bonds, 52–53
- leverage in, 87
- listed, 54
- maturity, 52
- notes, 52
- over-the-counter trading, 54
- performance bonds, 44
- plain vanilla, 52
- trading, 53–54
- Treasury dealers, 54
- zero-coupon bonds, 52
- boredom, managing, 256
- borrowing. See leverage
- bottom-up analysis, 133
- break trades, 289–290
- breaking news, reacting to, 195–196
- breakouts, 142–143
- Briefing.com, 216
- brokerage accounts
- closing out orders, 24
- opening, 24, 266
- placing orders, 24
- transferring money from, 25
- brokers
- brokerage scams, 273–274
- choosing
- opening brokerage account, 266
- overview, 261–262
- price quotes, 262–263
- software-based trading platform, 264
- web-based trading platform, 264–266
- with day trader services
- Ally Invest, 267
- ATC Brokers, 272
- Charles Schwab Active Trading, 267–268
- ChoiceTrade, 268
- Cobra Trading, 268
- E*TRADE, 268
- eOption, 271
- Fidelity Active Trader Pro, 268–269
- Firstrade, 269
- FOREX.com, 273
- Infinity Futures, 271
- Interactive Brokers, 269
- Just2Trade, 269
- Lightspeed Trading, 269–270
- MB Trading, 271–272
- OANDA, 273
- overview, 266–267
- ScottradeELITE, 270
- SogoTrade, 270
- tastyworks, 272
- thinkorswim, 270
- TradeMONSTER, 272
- TradeStation, 229, 271
- dealers versus, 47
- defined, 21
- margin policies, 45–46
- program trading, 176
- regulation
- financial stability, 284
- money laundering, 284–286
- pattern day traders, 286–287
- tax reporting, 287
- bucket shops, 276
- Buffett, Warren, 14, 35
- bull market, 124, 136
- business partners, 290
- business plan
- choosing trade market and assets, 247–248
- goals, 246
- investing in business, 248
- revising, 249
- setting trading hours, 248
- business risk, 37
- buy orders, 119, 155, 160
C
- CAGR (compound average rate of return), 235
- calendar effects
- January effect, 171
- Monday effect, 171
- October effect, 172
- overview, 170–171
- call options, 71, 75, 88
- CAN SLIM criteria, William O’Neil research service, 202–203
- candlestick charts, 149–150
- capital assets pricing model, 31, 162, 226
- capital gains/losses, 234, 299–300
- Capone, Al, 286
- certified public accountants (CPAs), 295
- CFTC (Commodity Futures Trading Commission), 219, 281
- channel trading (range trading), 178
- Charles Schwab Active Trading, 267–268
- chart traps, 170
- Chicago Board Options Exchange, 73
- Chicago Board Options Exchange Education Center, 207
- Chicago Mercantile Exchange, 73
- ChoiceTrade, 268
- circuit breakers, 289
- closing out position
- investing, 123
- position trading, 122
- swing trading, 122
- CME Group, 207
- coaching services, 259
- Cobra Trading, 268
- Coinbase, 217
- coins, cryptocurrency, 66
- Cold Turkey app, 256
- commissions, 22, 191, 197–198, 267
- overtrading and, 329–330
- regulation, 276
- taxes and, 304–305
- commodities, 56–57, 292
- Commodity Futures Trading Commission (CFTC), 219, 281
- common stock, 26. See also stocks
- compound average rate of return (CAGR), 235
- compound interest, 108
- computers, choosing, 250
- consolidation (congestion) phase, trends, 141
- continuation (main) phase, trends, 141
- contrarian trading, 178
- contrarian traps, 170
- convergence, technical analysis, 140
- convertible arbitrage, 187
- convertible bonds, 72
- corrections (retracements), 137, 141, 143
- counseling services, 259
- coupons, 52. See also bonds
- CPAs (certified public accountants), 295
- creation units, ETF, 60–61, 75–76, 187
- crossovers, technical analysis, 139–140
- cryptocurrency, 25
- Bitcoin, 65
- blockchain, 65
- Coinbase website, 217
- forks, 66
- initial coin offerings, 66
- overview, 64–65
- pump and dump, 67
- regulation, 283
- risk, 69
- trading, 66–69
- wallet, 68
- cup and handle formation, technical analysis, 145–146
- currency trading, 55–56
- regulation, 283
- taxes, 292–293
- cutting losses, 125–126
D
- dark pools (dark liquidity), 52, 167, 262
- data mining, 221
- day trading
- avoiding, 319–324
- common mistakes of, 325–330
- defined,
- difficulty of, 17
- discipline, importance of, 194
- factors influencing volatility,
- gambling versus, 16
- handling breaking news, 195–196
- hedging, –9
- as hobby, 12–13
- investing versus, 15
- momentum investing, 199–203
- as part-time business, 11–12
- personality traits of successful day traders, 13–15
- reasons to, 313–318
- risk capital, 16
- setting targets/limits, 196–197
- short selling, 204
- speculating, –9
- success rates, 17–18
- trade execution, 197–199
- zero-sum market, –10
- Day Trading Academy, 210
- dealers, 47
- deductible expenses, taxes
- business expenses, 308
- investments
- advisory services, 303
- attorney and accounting fees, 302
- interest paid on loans, 303
- office expenses, 302–303
- safe-deposit box rent, 303
- state income taxes, 304
- delta, volatility, 100
- depression, managing, 256
- derivatives
- defined, 40
- futures contracts, 71–72
- leverage and, 89
- options, 70–71
- overview, 69–70
- regulation, 281–282
- risk arbitrage, 184
- trading, 72–73
- warrants, 72
- discount bonds, 52–53
- distribution phase, trends, 141
- divergence, technical analysis, 140
- diversification, 96
- dividends, stock, 46
- dollar-weighted (money-weighted) return, 238
- doubling down, 104–105, 335
- doubt, managing, 254
- Dow, Charles, 147
- Dow Theory, 148
- due diligence, on research services
- Commodity Futures Trading Commission, 219
- FINRA BrokerCheck service, 219
- National Futures Association BASIC, 220
- overview, 218–219
- questions to ask, 220–221
- SEC, 220
E
- E*TRADE, 268
- earned income, taxes on, 298–299
- earnings expectations
- expected return, 96–97
- probability of ruin, 97–99
- earnings momentum, 200
- electronic communications networks (ECNs), 49–50
- Elite Trader, 341
- Elliott, Ralph, 149
- Elliott Wave system, 149
- Elliott Wave website, 217
- emotions, managing
-
Endicott v. Commissioner (2013), 294
- enrolled agents, 295–296
- eOption, 271
- estimated taxes, 309
- ETF arbitrage, 187–188
- ETFs (exchange-traded funds)
- creation units, 60–61, 75–76, 187
- defined, 26
- ETF arbitrage, 187–188
- overview, 60–61
- retail shares, 61
- risk, 64
- shareholders, 187
- strategy ETFs, 62
- tracking error, 64
- trading, 63
- traditional ETFs, 61
- ETNs (exchange-traded notes), 61
- European options, 190
- excess margin, 44
- exchanges
- dark pools, 52, 167, 262
- electronic communications networks, 49–50
- Nasdaq, 48–49
- NYSE, 48
- over-the-counter
- OTC Link, 51
- Over-the-Counter Bulletin Board, 50–51
- penny stocks, 51
- exchange-traded funds. See ETFs
- exchange-traded notes (ETNs), 61
- execution, trade. See trade execution
- exercise, role in work-life balance, 257
- expected returns, 96–97
- expert advisor. See program trading
F
- false breakouts, 142–143
- FCMs (futures commission merchants), 72, 282
- fear, managing, 254–255
- Federal Reserve System, 280
- fees
- broker, 23
- margin, 82–83
- tax deductible, 302
- Fibonacci numbers, 148–149
- Fidelity Active Trader Pro, 268–269
- Financial Industry Regulatory Authority. See FINRA
- financial markets
- assets, 25–26
- brokerage accounts
- closing out orders, 24
- opening, 24
- placing orders, 24
- transferring money from, 25
- commissions, 22
- concentration/focus, importance of, 27
- exchanges, 21–22
- fees, 23
- gambling, 36–37
- investing, 35
- market efficiency, 32–34
- over the counter trades, 22
- overview, 19–20
- positions, 26–27
- returns
- opportunity cost, 31
- risk-free rate of return, 32
- risk-reward tradeoff, 32
- time value of your money, 32
- risk
- business risk, 37
- defined, 28
- limited liability, 29–30
- personal risk, 38
- probability of loss, 28–29
- volatility, 30–31
- zero-sum market, 30
- spread, 23
- supply and demand, 20–21
- trading, 35–36
- zero-sum market, 23–24
- FINRA (Financial Industry Regulatory Authority)
- margin rules, 45
- pattern day traders, 84
- regulation, 279
- Rule 4210, 286–287
- FINRA BrokerCheck service, 219, 279
- Firstrade, 269
- fixed income investments, 52. See also bonds
- fixed-fractional trading, 102, 333
- fixed-income arbitrage, 188–189
- fixed-ratio trading, 102–103, 333
- flags, technical analysis, 143–144
- force index, 159
- forex (foreign exchange)
- brokers with day trader services for, 272–273
- currency, 55
- defined, 25–26
- leverage in, 25, 90
- regulation, 283–284
- FOREX.com, 273
- forks, defined, 66
- free riding, 92–93
- Freedom app, 256
- frequency, liquidity, 41–42
- Friedman, Milton, 20
- fundamental research, 133, 320
- futures commission merchants (FCMs), 72, 282
- futures contracts
- defined, 25
- leverage and, 88–89
- overview, 71–72
- taxes, 292
G
- gain per day, 116
- gain per trade, 116
- gambling
- day trading versus, 16, 323
- defined, 36–37
- gamma, volatility, 100
- Gann, William, 150
- Gann system, 150, 332–333
- gaps, technical analysis, 146–147
- garbitrage, 191
- ghost trading. See simulation trading
- golden ratio, 148–149
- greed, managing, 255
- Greeks, volatility, 100
H
- half Kelly trade, 104, 334
- head and shoulders formation, technical analysis, 144–145
- hedge funds, 63, 290
- hedging, –9
- High Yield Investment Program (HYIP), 116
- high-frequency trading, 41–42, 77
- hobby
- day trading as, 12–13
- role in work-life balance, 258
- HYIP (High Yield Investment Program), 116
I
- ICOs (initial coin offerings), 66
- implied volatility, 163
- Inbox When Ready app, 256
- income returns, 234. See also returns
- index arbitrage, 189
- IndexArb.com, 341
- indicators
- defined, 138
- momentum indicators, 141–142, 156–157
- moving averages, 139–140
- pivot points, 139
- price indicators, 156–159, 166–167
- Infinity Futures, 271
- inflation, defined, 32
- information resources
- books
- basic trading guides, 337–338
- history, 340–341
- price theory, 339
- technical analysis guides, 338–339
- trading psychology, 340
- mainstream media, 342
- online, 341–342
- initial coin offerings (ICOs), 66
- insider trading, 33, 287–288
- Institute for Financial Markets, 207
- Interactive Brokers, 269
- IntercontinentalExchange, 207
- interest
- compound interest, 108
- margin interest, 46
- open interest, 160–161
- taxes and, 306
- Internet service, choosing, 250–251
- inverse ETFs, 62
- investing
- closing out position, 123
- day trading versus, 15
- defined, 35
- investors learning from day traders, 193–204
- taxes on investment income, 299
- Investing.com, 217
- investment expenses, tracking
- at-risk rules, 306
- deductible, 302–304
- interest expenses, 306
- non-deductible, 304–305
- passive activity, 306
- two percent limit, 306
- Investopedia, 210–211
- Investor/RT software, 228
J
- January effect, 171
- Japanese candlestick charting, 149–150
- Just2Trade, 269
K
- Kapitall, 211
- Kelly Criterion formula, 103–104, 334
L
- law of one price (one-price rule), 74, 76, 180
- leverage
- borrowing for trading capital, 91–92
- defined, 16, 87, 247
- in Forex, 25, 90
- free riding, 92–93
- in futures trading, 88–89
- leverage strategies, 286
- margin loans, 91
- in options market, 88
- risk, 93–94
- risk arbitrage, 185
- in stocks and bonds, 87
- leveraged ETFs, 62
- Libor, 82
- liens, 82
- Lightspeed Trading, 269–270
- limit orders, 118, 196, 255
- limited liability, 29–30
- liquidity
- listed bonds, 54
- Litecoin, 66
- loss limits, 117
M
- main (continuation) phase, trends, 141
- mainstream media, as information resource, 342
- margin
- brokerage firm's policies, 45–46
- costs and fees of, 82–83
- excess margin, 44
- leverage, 80
- margin agreements, 81
- margin calls, 83
- overview, 43–44
- for pattern day traders, 45, 83–84
- margin loans, 91
- market capitalization, 47
- market efficiency, 32–34, 74–75, 135, 180–181
- market makers, Nasdaq, 49
- MarketDelta software, 215
- mark-to-market accounting, 307
- mark-to-market election, 296
- martingale system, 104–105, 335
- maturity, bonds, 52
- MB Trading, 271–272
- meditation, role in work-life balance, 257–258
- merger arbitrage, 189–190
- MetaStock software, 215, 228
- MetaTrader software, 273
- miscellaneous income, 301–302
- mobile trading, 252–253
- Modified Dietz method, 236
- momentum investing
- earnings momentum, 200
- momentum indicators, 141–142
- momentum oscillators, 156–157
- overview, 199
- price momentum, 200–201
- Value Line research service, 201
- William O’Neil research service, 202–203
- Monday effect, 171
- money flow
- accumulation/distribution index, 164
- money-flow index, 165
- money-flow ratio, 165
- overview, 163–164
- short interest ratio, 165–166
- money laundering, 284–286
- money management
- earnings expectations, 96–99
- fixed-fractional trading, 102, 333
- fixed-ratio trading, 102–103, 333
- Gann system, 332–333
- Kelly Criterion formula, 103–104, 334
- market volatility and, 99–100
- martingale system, 104–105, 335
- Monte Carlo simulation, 105, 335
- opportunity cost, 101
- Optimal F system, 106, 334
- overview, 95, 331
- profits
- account withdrawals, 109–110
- compound interest, 108
- pyramiding, 109
- saving, 332
- returns, 106–108
- stop orders, 332
- 10-percent strategy, 103
- Money Show, 209
- money-flow index, 165
- money-flow ratio, 165
- money-weighted (dollar-weighted) return, 238
- monitors, choosing, 250
- Monte Carlo simulation, 105, 335
- moving averages, 139–140
N
- Nakamoto, Satoshi, 65
- Nasdaq, 48–49
- Nasdaq Capital Market, 49
- Nasdaq Global Market, 49
- Nasdaq Global Select Market, 49
- Nasdaq/OMX, 208
- National Association of Securities Dealers, 279
- National Best Bid or Offer, 198
- National Futures Association (NFA)
- Background Affiliation Status Information Center, 220
- Investor Learning Center, 208
- regulation, 281–282
- need-to-make number, 255
- negative-sum game, 23
- New York Stock Exchange (NYSE), 48, 208
- news flows, 168–169
- news trading, 179
- NFA. See National Futures Association
- NinjaTrader service, 215, 229
- non-deductible expenses, taxes, 304–305
- notes, 52. See also bonds
- NYSE (New York Stock Exchange), 48, 208
O
- OANDA broker, 273
- OCO (order cancels other), 118
- October effect, 172
- OmniTrader service, 215
- on-balance volume, 160
- 1-2-3-4 criterion, securities, 158
- one-price rule (law of one price), 74, 76, 180
- online resources
- Elite Trader, 341
- IndexArb.com, 341
- IRS website, 297
- Reddit, 342
- Trade2Win, 342
- Trader Mike blog, 342
- TraderInterviews.com, 342
- Traders Laboratory, 342
- Treasury bonds, 54
- Online Trading Academy, 211
- open interest, 160–161
- opportunity cost, 31, 101
- Optimal F system, 106, 334
- option arbitrage, 190–191
- options, 70–71
- brokers with day trader services for, 271–272
- defined, 25
- leverage in, 88
- options expiration, 41
- taxes, 293–294
- OptionVue service, 229
- order book, 167
- order cancels other (OCO), 118
- order sends order (OSO), 119
- OTC BB (Over-the-Counter Bulletin Board), 50–51
- OTC Link, 51
- overanalyzing data, 151
- overconfidence, danger of, 126
- Over-the-Counter Bulletin Board (OTC BB), 50–51
- over-the-counter exchanges, 22
- bonds, 54
- OTC Link, 51
- Over-the-Counter Bulletin Board, 50–51
- penny stocks, 51
P
- pair trading, 179
- paper trading, 177. See also simulation trading
- part-time trading, 11–12
- passive activity, investments, 306
- pattern day traders
- margin for, 45, 83–84
- regulation, 286–287
- patterns, technical analysis
- cup and handle formation, 145–146
- flags, 143–144
- gaps, 146–147
- head and shoulders formation, 144–145
- pennants, 143–144
- pitchforks, 147
- pennants, technical analysis, 143–144
- pennies, 116
- penny stocks, 51
- People in Profit (PIP), 116
- performance, measuring
- backtesting
- overview, 224–226
- software for, 228–229
- benchmarks, 241–242
- overview, 223
- returns
- analyzing, 234
- calculating, 234–239
- determining risk to return, 239–241
- simulation trading
- backtesting and, 227–229
- overview, 226–227
- tracking trades
- profit and loss statement, 230–231
- on spreadsheet, 230
- trading diary, 232–233
- performance bonds, 44. See also margin
- personal risk, 38
- personality traits of successful day traders, 13–15
- PIP (People in Profit), 116
- pips, 116
- pitchforks, technical analysis, 147
- pivot points, 139
- plain vanilla bonds, 52
- planning trades
- bear market, 124
- bull market, 124
- buy orders, 119
- closing out position
- investing, 123
- position trading, 122
- swing trading, 122
- cutting losses, 125–126
- knowing when to move on, 123–124
- limit orders, 118
- loss limits, 117
- morning review, 114
- order cancels other, 118
- order sends order, 119
- overconfidence and, 126
- overview, 111
- profit goals, 115–116
- rumors, 125
- sample order, 114–115
- sample trading plan, 120–121
- sell orders, 119
- stop orders, 117–118
- survival bias, 127
- technical analysis, 115
- trends, 124–125
- what to trade, 112–113
- when to trade, 113
- points, defined, 116
- position trading, 26–27, 122
- positive-sum game, 23
- price changes
- arbitrage, 181–182
- technical analysis, 135
- price discovery, 68
- price indicators, 156–159, 166–167
- price momentum, 200–201
- price quotes
- Level I quotes, 263
- Level II quotes, 263
- overview, 262–263
- TotalView quotes, 263
- price theory, 339
- prime rates, interest, 82
- probability of loss, 28–29
- probability of ruin, 97–99
- profit and loss statement, 230–231
- profits
- account withdrawals, 109–110
- compound interest, 108
- profit goals, 115–116
- pyramiding, 109
- program trading
- adding trading platform, 176
- arbitrage trading
- law of one price, 180
- market efficiency and, 180–181
- overview, 179–180
- price discrepancies, 181–182
- backtesting, 177
- brokerage firms, 176
- contrarian trading, 178
- convertible arbitrage, 187
- ETF arbitrage, 187–188
- fixed-income arbitrage, 188–189
- index arbitrage, 189
- limitations of, 175
- merger arbitrage, 189–190
- news trading, 179
- option arbitrage, 190–191
- overview, 173–174
- pair trading, 179
- range trading, 178
- risk arbitrage
- derivatives, 184
- leverage, 185
- overview, 183–184
- short selling, 185
- synthetic securities, 185–186
- scalping, 182–183
- trading modules, 176
- transaction costs, 191–192
- pullbacks (retracements), 137, 141, 143
- pump and dump, 51, 67
- Pure Investor, 116
- put options, 71, 75, 88
- pyramid scheme, 109
- pyramiding, 109
Q
- qualified purchasers, hedge fund, 290
- quote stuffing, 168
- quote-rate pirates, 168
R
- range trading (channel trading), 178
- Reddit, 342
- regulation
- break trades, 289–290
- brokers, 284–287
- business partners, 290
- circuit breakers, 289
- derivatives, 281–282
- exchanges, 279–280
- Federal Reserve, 280
- FINRA, 279
- Forex, 283–284
- history of, 276–277
- insider trading, 287–288
- overview, 275
- SEC, 278
- Securities Investor Protection Corporation, 280
- short-selling restrictions, 289
- stock and corporate bond market, 278–280
- Treasury bond market, 280
- research resources
- Briefing.com, 216
- Chicago Board Options Exchange Education Center, 207
- CME Group, 207
- Coinbase, 217
- conferences, 208–209
- due diligence on, 218–221
- Commodity Futures Trading Commission, 219
- FINRA BrokerCheck service, 219
- National Futures Association BASIC, 220
- overview, 218–219
- questions to ask, 220–221
- SEC, 220
- Elliott Wave website, 217
- information resources
- books, 337–338
- mainstream media, 342
- online, 341–342
- Institute for Financial Markets, 207
- IntercontinentalExchange, 207
- Investing.com, 217
- Money Show, 209
- Nasdaq/OMX, 208
- National Futures Association Investor Learning Center, 208
- New York Stock Exchange, 208
- overview, 205–206
- prices, 212–214
- School of Gann website, 217
- Trader and Investor Summit, 209
- TradeTheNews.com, 218
- Trading Show Chicago, 209
- trading strategies
- MarketDelta software, 215
- Metastock software, 215
- NinjaTrader service, 215
- OmniTrader service, 215
- overview, 214
- StockTwits service, 216
- Trade-Ideas software, 216
- training classes
- Day Trading Academy, 210
- Investopedia, 210–211
- Kapitall, 211
- Online Trading Academy, 211
- overview, 209–210
- TopstepTrader, 211
- Trading Advantage, 212
- Value Line research service, 201
- William O’Neil research service, 202–203
- retracements, 137, 141, 143
- returns
- analyzing, 234
- calculating
- compound average rate of return, 235
- deposits/withdrawals, 235–239
- dollar-weighted return, 238
- Modified Dietz method, 236
- overview, 234–235
- time-weighted rate of return, 237
- capital gains, 234
- determining risk to return
- standard deviation, 239–241
- win-loss percentage, 239
- effect of money management on, 106–108
- income returns, 234
- opportunity cost, 31
- risk-free rate of return, 32
- risk-reward tradeoff, 32
- time value of your money, 32
- reversals, 141
- risk
- business risk, 37
- cryptocurrency, 69
- defined, 28
- exchange-traded funds, 64
- leverage, 93–94
- limited liability, 29–30
- personal risk, 38
- probability of loss, 28–29
- short selling, 93–94
- uncertainty versus, 169
- uncorrelated risk, 63
- volatility, 30–31
- zero-sum market, 30
- risk arbitrage
- derivatives, 184
- leverage, 185
- overview, 183–184
- short selling, 185
- synthetic securities, 185–186
- risk capital, 16, 284
- risk to return
- standard deviation, 239–241
- win-loss percentage, 239
- risk-free rate of return, 32
- risk-reward tradeoff, 32
- round lots, 43
- rumors, 125
S
- School of Gann website, 217
- ScottradeELITE, 270
- SEC (Securities and Exchange Commission)
- investigating research services, 220
- National Best Bid or Offer, 198
- regulation, 278
- securities. See also assets
- defined, 40
- 1-2-3-4 criterion, 158
- Securities Investor Protection Corporation (SIPC), 280
- security
- brokerage scams, 273–274
- virus protection, 251
- self-directed IRAs, 309–310
- sell orders, 119
- sell rule, 194
- semi-strong market efficiency, 75, 180
- setting up business
- backing up systems, 252
- behavioral finance, 253
- business plan
- choosing trade market and assets, 247–248
- investing in business, 248
- revising, 249
- setting goals, 246
- when to trade, 248
- computers, 250
- Internet service, 250–251
- managing emotions
- mobile trading, 252–253
- monitors, 250
- overview, 245
- security, 251
- support systems
- walk-away money, 260
- work-life balance
- exercise, 257
- friends and family, 258
- hobbies, 258
- meditation, 257–258
- overview, 256–257
- shareholders, ETF, 187
- short interest ratio, money flow, 165–166
- short selling, 204
- calling back stock, 86
- choosing shorts, 85–86
- overview, 84–85
- risk, 93–94
- risk arbitrage, 185
- short squeeze, 86
- short-selling restrictions, 289
- simulation trading
- backtesting and, 227–229
- defined, 177
- overview, 226–227
- SIPC (Securities Investor Protection Corporation), 280
- smart money, 160
- Smith, Adam, 20
- social media, 168–169, 256
- software-based trading platforms, 264
- SogoTrade, 270
- speculating, –9, 36
- spread, 23, 47, 267
- squawk box, 218
- standard deviation, 30, 42–43, 100, 239–241
- stocks, 26
- ask price, 46–47
- bid price, 46–47
- brokers with day trader services for, 267–271
- exchanges, 47–52
- dark pools, 52, 167, 262
- electronic communications networks, 49–50
- Nasdaq, 48–49
- NYSE, 48
- over-the-counter, 50–51
- overview, 47–48
- leverage in, 87
- taxes, 294–295
- StockTwits service, 216
- stop orders, 117–118, 196, 332
- stop-limit orders, 26, 118
- straddles, 306
- strategy ETFs, 62
- strike price, 88
- strong market efficiency, 74, 180
- subpennying, 76, 182
- substantial activity, trading, 294
- supply and demand, 20–21
- support level, trendlines, 137
- support systems, setting up, 259
- survival bias, 127
- swing trading, , 122, 133
- synthetic securities, 185–186
T
- tastyworks website, 272
- tax attorneys, 296
- taxes
- business expenses, 308
- capital gains/losses, 299–300
- commodities, 292
- currency trading, 292–293
- earned income, 298–299
- estimated taxes, 309
- forms, 308–309
- futures contacts, 292
- information resources, 297
- investment expenses
- at-risk rules, 306
- deductible, 302–304
- interest expenses, 306
- non-deductible, 304–305
- passive activity, 306
- two percent limit, 306
- investment income, 299
- mark-to-market accounting, 307
- miscellaneous income, 301–302
- options, 293–294
- overview, 291
- regulation, 287
- self-directed IRAs, 309–310
- stock trading, 294–295
- tax experts, 295–297
- tax-preparation software, 298
- technical analysis, 115
- bottom-up research, 133
- charting, 134–135
- Dow Theory, 148
- Elliott Wave system, 149
- Fibonacci numbers, 148–149
- fundamental research, 133
- Gann system, 150
- information resources, 338–339
- Japanese candlestick charting, 149–150
- overanalyzing data, 151
- overview, 131
- patterns
- cup and handle formation, 145–146
- flags, 143–144
- gaps, 146–147
- head and shoulders formation, 144–145
- pennants, 143–144
- pitchforks, 147
- price changes, 135
- top-down research, 132–133
- trends
- breakouts, 142–143
- indicators, 138
- momentum indicators, 141–142
- moving averages, 139–140
- overview, 136–137
- phases of, 140–141
- pivot points, 139
- trendlines, 137–138
- upward bias, 151–152
- volume changes, 135
- teenies, 116
- theta, volatility, 100
- thinkOnDemand backtesting, 270
- thinkorswim, 270
- Thorpe, Edward O., 104
- ticks, 116, 158
- time value of your money, 32
- time-weighted rate of return, 237
- tokens, cryptocurrency, 66
- top-down analysis, 132–133
- TopstepTrader, 211
- tracking error, ETFs, 64
- tracking trades
- profit and loss statement, 230–231
- on spreadsheet, 230
- trading diary, 232–233
- trade execution
- costs, 197–198
- improving, 198–199
- trade on margin, 24
- Trade2Win website, 342
- Tradecision service, 229
- Trade-Ideas software, 216
- TradeMONSTER, 272
- Trader and Investor Summit, 209
- Trader Mike blog, 342
- TraderInterviews.com, 342
- Traders Laboratory, 342
- TradeStation service, 229, 271
- TradeTheNews.com, 218
- trading, defined, 35–36
- Trading Advantage website, 212
- Trading Blox service, 229
- trading diary, 232–233
- trading in the spot market, 56
- trading indicator (trin), 158–159
- trading modules, 176
- trading psychology, 340
- trading robot. See program trading
- Trading Show Chicago, 209
- trading strategies. See also planning trades
- anomalies
- calendar effects, 170–172
- defined, 169
- money flow
- accumulation, 164
- distribution, 164
- money-flow index, 165
- money-flow ratio, 165
- overview, 163–164
- short interest ratio, 165–166
- news flows, 168–169
- order book, 167
- overview, 153–154
- price indicators, 156–159, 166–167
- psychology and, 154–155
- quote stuffing, 168
- traps
- chart traps, 170
- contrarian traps, 170
- overview, 169–170
- volatility and, 161–163
- volume changes, 159–161
- traditional ETFs, 61
- trailing stops, 117–118
- training classes
- Day Trading Academy, 210
- Investopedia, 210–211
- Kapitall, 211
- Online Trading Academy, 211
- overview, 209–210
- TopstepTrader, 211
- Trading Advantage, 212
- transaction costs, program trading, 191–192
- traps
- chart traps, 170
- contrarian traps, 170
- defined, 169
- Treasury bond market, 280
- Treasury dealers, 54
- trendlines, 137–138
- trends, 124–125
- accumulation phase, 141
- breakouts, 142–143
- consolidation phase, 141
- distribution phase, 141
- indicators, 138
- main phase, 141
- momentum indicators, 141–142
- moving averages, 139–140
- overview, 136–137
- pivot points, 139
- retracements, 137, 141, 143
- reversals, 141
- trendlines, 137–138
- trin (trading indicator), 158–159
- two percent limit, 306
U
- uncertainty, defined, 169
- uncorrelated risk, 63
- unit investment trusts, 69
- unlimited liability, 29
- upward bias, 151–152, 247
V
- Value Line research service, 201
- vega, volatility, 100
- virus protection, 251
- VIX, 162–163
- volatility
- assets, 42–43
- average true range, 161–162
- beta, 30–31, 162
- delta, 100
- gamma, 100
- implied, 163
- money management and, 99–100
- theta, 100
- trading strategies and, 161–163
- vega, 100
- VIX, 162–163
- volatility ratio, 163
- volume
- liquidity, 41
- technical analysis, 135
- trading strategies, 159–161
W
- walk-away money, 260
- wallet, cryptocurrency, 68
- want-to-make number, 255
- warrants, 72
- wash-sale rule, 293, 296, 300–301
- Watergate scandal, 286
- weak-form market efficiency, 75, 180
-
Wealth of Nations, The (Smith), 20
- web-based trading platforms, 264–266
- William O’Neil research service, 202–203
- win-loss percentage (win ratio), 239
- work-life balance
- exercise, 257
- friends and family, 258
- hobbies, 258
- meditation, 257–258
- overview, 256–257
- workspace, 249–250
Z
- zero-coupon bonds, 52
- zero-sum market, –10, 23–24, 30, 247
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