Wall Street Under 30

Now that we have discussed the basics of trading, this post will be another addition to the “strategies” series where we will discuss the how-tos of specific strategies. For this post, we will be discussing the gap fill strategy to be used when trading the stock market. Everyday, the regular hours trading session for the stock market opens at 9:30am EST and closes at 4:00pm EST. However, there is also the extended hours session which fewer investors have access to which generally begins trading at 6:00am EST and closes at 8:00pm EST. Very few traders are able to place trades during this time and even fewer actually do. As a result, this time is marked by incredibly low volume in the stock market as compared to the regular trading hours. Because of this, large orders can move the market significantly during this time. For the trader who only uses the regular trading hours session to look at charts, this can create “gaps” in data. A gap occurs when there is a difference between the clos...

In this article I will present one of the technical strategies used by many technical and fundamental traders alike. Moving averages, often abbreviated as MAs, are used as a data smoothing technique and are considered a lagging indicator. Moving averages work by averaging the price fluctuations over a given time frame. The time frame used is referred to as the “period.” Common periods include 14, 50, 100, and 200 period moving averages but these can further be adapted to additional time frames by adjusting the length of one period. In stock trading, the most common length of a period is the day, which means that a 200 period moving average is in this case a 200 day moving average. The 200 day moving average is widely regarded as a very telling indicator in the world of stock trading. In other markets, traders may apply the 200 period moving average to an hourly chart effectively making it a 200 hour moving average. This technique can be used to provide more specific and recent data wh...

Now that you have an idea of the capital involved in beginning to trade and the different types of markets available to you, the next step is to identify a strategy to trade with. There are countless strategies available to the beginning trader. Many of these basic strategies can be found readily and for free online. However, it is important to realize any strategy that is widely accepted among the trading community is most likely being overused. Large retail and institutional traders are able to manipulate the markets against the beginning trader using these basic strategies. Because of this, many new traders will find simple strategies that appear to be profitable but once they begin trading live they will find that the strategy actually nets a loss. This is because of market manipulation. This is not to discourage the beginning trader from trying these strategies, however, because every strategy works differently and some may work for others and not for you. There are essentially t...

Now that we have discussed the basic hardware needed to begin trading and the types of markets available for the beginning day trader, it is time to choose a market to begin trading. This post will be provide a simple approach to choosing the right market for the individual retail trader. The most important factor in determining your options is of course the amount of seed capital you have access too. It is important to note that all capital used for trading should be treated as risk capital, that is money that has been set aside knowing that it could be entirely lost. Never trade with money that you cannot afford to lose. In order to begin day trading the Stock Market, you need $25,000 in order to do it efficiently. This is because of the Pattern Day Trader Rule. The PDT rule limits the number of times a trader can open and close a position within any given trading week. A trader cannot open and close a position within a 24 hour period more than 3 times per 5 day trading week. If thi...