Day trading the stock market with a full time job? ...or Swing trade? Please help!

[Dr. Toad]

You mentioned that you have similar working hours to me, did you consider trading the afternoon using day trading strategies?

I wish I had similar hours to you, but actually I am in the US so really for me any day trading of the US market quite literally has to take place during my work hours. This is why I have tried to develop a system that minimizes the need for me to babysit. My work schedule is flexible in that I can work pretty much any hours I want as long as I put in 40 hours a week and am there during the core hours 4 of the days (9-4).

I know that one strategy is to short the afternoon fade, whereby the price enters a trading range, fails multiple times to break out to a new high before eventually breaking down below the morning low, with an optional test of resistance before free-falling! TBH this sounds risky, so you would definitely want to have one eye on the charts and the other on level 2

You got me on that one...I am just trading what I see on my super fancy yahoo finance charts and the bid/ask spread showing in my account when I am nearing a buy or sell point. All on my handy dandy smart phone...really far from ideal, but where there is a will, there is a way. It helps that I know my exact buy in and sell points going into the day though, and after the first 5 minutes I am only really tracking one or two stocks until I buy in and just let it ride a while.

I have looked at level 2 quotes before, but quite often you see large bids or sells that are just canceled immediately...or sometimes they aren't...I really couldn't find much of a pattern with them when I looked, so I abandoned them for the time being. Also, they would be quite difficult to manage on a 2"x3" screen.

 

[timsk]

. . . Were there any specific strategies that helped you trade the afternoon session?

Hi panvulcon,
Just so we don't get our wires crossed, the flat time to avoid is the U.S. lunchtime session (i.e. 5.00 - 7.00pm U.K. time). So, by 'afternoon session' - are you referring to the U.S. afternoon (i.e. 7.00 - 9.00pm U.K. time) or are you referring to the U.K. afternoon (i.e. 9.30 - 12.00noon U.S. time)?
Tim.

 

[panvulcon]

Hi panvulcon,
Just so we don't get our wires crossed, the flat time to avoid is the U.S. lunchtime session (i.e. 5.00 - 7.00pm U.K. time). So, by 'afternoon session' - are you referring to the U.S. afternoon (i.e. 7.00 - 9.00pm U.K. time) or are you referring to the U.K. afternoon (i.e. 9.30 - 12.00noon U.S. time)?
Tim.

I'm referring to the U.S. Afternoon so 7:00pm - 9:00pm UK time.

 

[timsk]

I'm referring to the U.S. Afternoon so 7:00pm - 9:00pm UK time.

Hi panvulcon,
Okay, glad we're clear!

It's about 10 years ago now, so the exact details are a little hazy. However, the basic strategy can best be described as Reversion to Mean. I focused on a basket of about 20 liquid stocks with large intra-day volumes, upwards of a million shares I think. Or was it two, I can't recall. So, stocks like Amazon, Amgen, Starbucks and Yahoo etc. One criteria was an average daily high to low move of $2.00 or more. I then stuck on a 89 period moving average on a 5 minute chart. At the time, great significance was attached to Fib' numbers and there were those who swore blind that these made all the difference! Total balderdash of course, but I was inexperienced and impressionable in those days. So, any MA in the region of say, 75 - 100 would probably have sufficed - but I used the 'magic' 89. Besides the daily volume and minimum $2.00 movement, there was another key criteria that I kept a daily check on. That is that each stock printed to within $0.10 cents of the 89 MA at least once every day. If this happened before 3.30pm U.K. time - that could be ignored - the idea being that the stock and the MA would meet again later on in the day. I updated records by hand on a weekly basis and, any stock that failed to achieve a 90% success rate in this simple task was ousted unceremoniously from the basket and replaced with a better performer. The one complicating factor was that I ignored heavy trending days - but I can't remember how I defined those at the time I'm afraid. So, to the trades . . .

When I fired up my PC around 7.00pm, I would go through the basket of stocks and look for the ones that had moved 70% or more of their daily range but hadn't yet printed to within $0.10 cents of the 89 MA post. It was then a case of taking my cue from the Dow for a reversal in the direction of the MA. (Short those above it, long those beneath it.) The MA was the target. I forget details like stops and exits, but it would have been something very simple like a breach of the previous 5 min candle low (for a long trade). I probably had a 10 period EMA on the chart as well and may well have exited if price closed below the EMA (for a long position).

That's pretty much all there is to it. Basic stuff that worked well until I got cocky and thought I knew it all and had my derriere royally handed to me on a plate!

Tim.

 

[malaspina]

For those that are interested, my initial budget\capital is a very modest $3000 BUT this is topped up monthly with around $800 of completely, will not cry if i lose it all, disposable income.

Sorry for the long post and thanks for reading.

Andy

Enough trading capital, a risk management system and a sound trading idea with an edge is key. Make sure you have these 3 important ingredients. Good luck.

 

[NeilBower]

My personal experience was to start out daytrading, where I lost very small amounts of money very consistently. This was partly due to poor methodology, but also because it is very difficult to overcome fixed costs like commission and spread. I then began dabbling in swing trading and started making money. I then switched to EOD futures trading exclusively, and generated a reasonable return over a 12 month period. At the end of this I decided I was hugely over-leveraged, and that my career was disruptive even to EOD trading. I now re-balance positions once monthly!

For some people daytrading works, but I would guess that for the majority swing trading is the best way to start.

Moving on to your question about 'routine' . . .

I only used end of day data as a swing trader (although I'm not conceptually opposed to the use of intraday data - I'd look for some way to aggregate it to treat as an end of day input - for example you might take the average range of all 5 minute bars throughout the day and use this as part of your EOD analysis).

I had all the conditions that needed to be met to initiate a position in a radar screen, so I'd start by bringing this up. Most of the time there would be nothing to do and my day's work was over within half a minute. If I needed to initiate a new position then I would pull a chart for that market to ensure that the conditions continued to be met into the close. I would execute using a 'market on close' order with my broker.

Hope that helps!

 

[malaspina]

Yes, you are right. This can be a problem. Finding the right time frame for day trading could fix this situation. For day trading, it is best to trade 1 o 2 times a day finding the setups with the best odds.

My personal experience was to start out daytrading, where I lost very small amounts of money very consistently. This was partly due to poor methodology, but also because it is very difficult to overcome fixed costs like commission and spread.

 

[arigoldman]

Daytrading requires a lot of capital that you would have to divide in portions. Try Swing trading first, imo.