DAY TRADING

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DAY TRADING

• Carli Stefanacci
• Dr. Volpert
• November 13, 2000

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Opening Joke

• Whats a day trade gone bad?

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Answer

• An investment (okay, bad joke)

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Online Investor Vs. Day Trader

• 2-3 trades per month
• Orders placed through an online broker
• Time is not crucial
• Concerned about companies future, past, balance
  sheet
• Regular PC

• 100-300 trades per day
• Orders placed directly
• Time is extremely crucial
• Concerned about stock prices, nothing else
• High -tech equipment

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Day Trading Defined

• History
• founder Harvey Houtkins
• SOES bandits
• Day trading trading within the time frame of one
  day, entering and exiting positions within a day
  but always closing out trades by the end of the
  day, win, lose, or draw.

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Why Day Trade?

• For a change of pace
• People believe it is an easy way to make a quick
  profit for
• retirement
• childs education
• Easy access
• Anyone can do it!

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Who Day Trades?

• Anyone!
• Teachers
• Lawyers
• Doctors
• College dropouts

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Before Trading...

• Most importantly, become educated
• Many web sites dedicated to training
• traintodaytrade.com
• daytradingonline.com
• Classroom courses
• Harvey Houtkins All-Tech Investment Class
• Winning isnt possible all the time!
• Even the best lose

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Organization of day trading firms

• Open an account with the firm with your own
  assets
• Simply a customer of a day trading firm

• Organized as limited liability companies (LLCs)
  meaning day traders are part owner of the firm
  and allowed to trade using the firms capital

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Getting Started

• Usually day traders begin with 50,000 to
  100,000
• Most day trading firms require a minimum of
  25,000 to open an account
• Begin trading in lots of 200 shares

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Equipment

• Get the right equipment
• A new computer with a large screen
• Windows NT lots of memory, will allow for
  multiple windows to be open
• Multi-monitor set-up
• Direct internet connection
• Separate and multiple phone lines
• Television

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Trading Example

• Bid price 64.375
• It is offered for 64.75
• Investor buys 4,000 shares of the stock at
  64.4375 (total cost 257,750)
• Seconds later, investor sells those 4,000 shares
  at 64.6875 (total sale 258,750)
• Profit 1,000

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How To Succeed

• Dont get greedy
• Develop a financial plan before trading
• set a daily limit to profit and losses
• Get out when you can, not when you have to
• stay in control, dont let the market control you
• Trade when the market is moving
• dont try to move the market

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More Tips

• Employ low tolerance, high velocity (LTHV) get
  in and out quickly with little tolerance for big
  losses
• Know when to get smaller
• No overnight losers
• Know the stocks
• know their past and know how they react

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More Tips

• Trade the truth
• Trade on what is happening, not what you want to
  happen
• Realize the importance of timing
• Become disciplined
• Control the market
• Dont get attached to the money
• Dont get emotional

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Success Stories

• Barry Brautman
• 34-year-old former accountant seeking an exciting
  career in day trading
• Lost for two months straight, but now is
  profiting
• Nancy Sy
• 42-year-old credit specialist
• Went from 39,000 to 100,000 in two years, and
  plans to be a millionaire in 5 years

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Horror Stories

• Heather Cameron
• 36-year-old day trader
• Lost 400,000, her town house, and her fiancé
• Mark Barton
• 44-year-old ex-chemist, turned day trader
• Lost everything and went on a killing spree,
  killing 12 individuals, including his kids, wife
  and himself

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Advantages

• Holidays and weekends off
• Unlimited vacation time
• Access to Level II quoting system

• Able to take advantage of spreads
• Minimal concern about overnight news
• Immediate feedback and results of the days work

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Disadvantages

• Constantly fluctuating and very volatile
• Requires constant supervision
• Need for strong discipline when dealing with
  losses

• Unlimited risk
• Extremely addictive, like gambling

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Future

• Skeptics believe that
• Just a phase
• unpredictable
• will die out

• Advocate believe
• a revolution
• career of a new generation
• some believe that in the future the only way one
  will be able to trade is electronically

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Do You Have What It Takes?

• Fantasy day trading site
• www.virtualstockexchange.com
• www2.sportsrocket.com
• Day trader quiz
• http//www.traintodaytrade.com/train/psychology_te
  st.html

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Questions?