WallstreetSTTA Trading School
Welcome to WallstreetSTTA Trading school.
The trading school is where we post lessons base on our years of experience. All classes posted are our views or opinion and should only be viewed as such. Please consult a licensed professional before acting on any of our information. We will provide basic to advanced information in its simplest form. Our goal is always to make your learning simple, quick, and easy to understand. TRADING IS HARD ENOUGH, SO SIMPLIFYING THE INFORMATION WE PROVIDE IS IMPORTANT, WE WERE ONCE NEW TRADERS OURSELVES, SO WE UNDERSTAND. Be sure to check for updates weekly.
FEW RULES TO FOLLOW:
Here is one of my favorite quotes:
Give a man a fish, and you'll feed him for a day. Teach a man to fish, and you've fed him for a lifetime."
Have a strategy
Never chase a stock
Do not be greedy
Cut your losses Quickly(You wont win every trade but its better to loose -$100 than -$1000.
Always set your stop loss.
Lesson #1: Is Day Trading right for me?
First, you need to figure out what kind of trader you want to be? Long-term or short-term trader. Most traders lean towards the short term due to the possibility of a quick return in profit. Still, we suggest doing both is the safer and most wise option to take as it helps balances out your portfolio.
Typically hold on to an investment for a certain period, weeks, months, years sometimes.
Typically hold a stock anywhere from the day to a week.
How much cash to start with?
Realistically, Anywhere from $1000 – $3000 is a good starting point for a small account. If you have the guidance of an experienced trader, $500 is also good, but if you want to accelerate your growth quickly to 25,000.
we recommend $4,000 to $5000.
The next step is to choose a broker that suits your trading style. For new traders(noobs), we suggest going with one of the commission-free brokers, and most importantly, the platforms are easy to learn. On the other hand, we recommend a broker with direct market access for experienced traders with larger account sizes as they are already familiar with trading platforms. You may pay a small fee, but it helps.
Offshore brokers with no pattern day trader(PDT) Rules, and recommended broker's names for new and advanced traders are listed in our Mini Ebook: The beginner's introduction course. Check it out.
Lesson #2 Understanding Level II
Not having the basic understanding of Level 2 is like driving blind on a highway doing 100 miles per hour.
Most level 2 layouts are different depending on the brokers, but the fundamentals remain the same. BID. ASK. Share size. Volume. etc
Bid-Ask Spread is typically the difference between the ask (offer/sell) price and bid (purchase/buy). Ask price is the value point at which the seller is ready to sell, and bid price is the point at which a buyer is prepared to buy
Share Size - The size of a trade. For each order placed to buy or sell, the amount is printed on level 2.
A market maker is an individual participant or firm of an exchange that buys and sells securities . Market makers provide the market with liquidity and depth while profiting from the difference in the bid-ask spread.
Here are an example of level 2 explaining the basic.
Yellow -Bid and Ask, Showing the buy and sell at the current price per share(PPS)
Blue -Showing the amount of share available for buying and selling at the bid and ask.
Red- Market makers, the symbols, ARCA, NSDQ etc are firms in short. There are many more firm symbols not shown here on this level.
Green -Level 2 shows the live detailed price action, share size, and time each transaction is filled.
Orange - Volume, total volume traded for the day
You-tube is an excellent tool for stock market traders. There are tons of information available on there to further your education. We highly recommend checking out one of the countless videos on there to help you further understand Level 2
Lesson #2 Understanding charts and their roles.
A chart is a fundamental part of any short, mid, or long-term trader's journey. A chart helps a trader make a critical decision on whether to buy or sell because most successful strategies are chart base. There are many different charts such as lines, candles, bar charts, volume, range, etc. The most popular among them is the candlestick.
Charts: Candlestick charts are a must! And keep it simple! You don't need 4 or 5 different charts to make money. More doesn't necessarily mean better. Most day traders, including myself, uses both the 5 mins and 1 min chart. I also recommend adding volume candlesticks indicators at the bottom of your chart(This highlights the total buys/sells per 1 or 5min range move). Refer to the picture below.
Candlestick Volume Bar
Now that you know the different types of charts knowing what to put on the charts is just as important. An indicator can be described as measurable data used to help calculate or predict the directional trend of the stock.
There are many types of indicators. We recommend taking the time to learn these two.
A)Moving Average Convergence Divergence (MACD)
keeping it simple. These are our favorites indicators.
The MA) Moving Average is described as a statistical data analysts that is commonly used to help steady the price movement by constantly updating it. After adding the MA to your charts there are two calculations that work best.
Note: The EMA and SMA have specific, or rather tested Calculations best used for Day trading and long term investing.
Find out the one that works best . The beginner's introduction course
SMA -Simple moving average(SMA) uses more for long trades if the price moves above SMA that signify BULLISH, below SMA means BEARISH.
EMA-Exponential moving average(EMA) is similar to the SMA and uses more for day trades/ short trades or Fast-moving market stocks.
RSI-Relative Strength Index (RSI) Simple put, it shows when a stock is oversold or overbought, which gives you a good indication of what direction the stock Price may take.
Time and sale: This is a simple but effective tool used to Shows real-time buy and sells data. T&S can be instrumental for entering and exiting a stock most of the time. Example tape trading. We recommend youtube for further in-depth breakdown
Lesson #3 Chart strategies.
Strategies are the key fundamental to being a successful Trader. Unfortunately, stats show that only 10% of traders make it in the market. Every trader uses a strategy whether they know it or not, For example, the basic strategy new traders commonly use is the pullback strategy.
Every trader needs at least 4-5 proven strategies that they can replicate daily to be a successful trader. Below I will give two proven simple but effective strategies used by top traders. Some traders teach both of these two new clients for a fee.
If you are struggling as a trader or trying to find proven strategies that work? Give our (Day trading strategies a try.
Buying above the (SMA/EMA)
A crossover is a trading strategy favored among many traders because it's easily recognized when formed. The most basic type of crossover is when the price of an stock moves from one side of a moving average and closes on the other. Traders use price crossovers to identify shifts in momentum and can be used as a basic entry or exit strategy. For example, as you can see in chart 1, a cross below a moving average can signal the beginning of a downtrend and would likely be used by traders as a signal to close out any existing long positions. Conversely, a close above a moving average from below may suggest the beginning of a new uptrend.
The second type of crossover occurs when a short-term (EMA) crosses through a long-term SMA). Traders use this signal to identify that momentum shifts in one direction and that a strong move is likely approaching. A buy signal is generated when the short-term average crosses above the long-term average, while a sell signal is triggered by a short-term average crossing below a long-term average. As you can see from the chart below, this signal is very objective, which is why it's so popular.
The third crossover occurs when a Long-term(SMA) average crosses through a long-term (EMA). In other terms, this is known as a shorting crossover. The concept is the same crossover strategy as the previous two. The main difference is that the crossover occurs on the down, and like the last two, the long-term (SMA) crosses over the Short Term (EMA).
Lesson #4 Important Terminology every trader should know.
There are many terminologies in the market traders should make time to learn, here we will list a few common ones, and viewers can see many more in our Ebook.
Market Capitalization: aka Market Cap) is the total dollar value of all of a company’s outstanding shares. It is used to determine the size and value of a company. The market cap is calculated by multiplying a company’s outstanding shares by the current market price of one share. It is crucial to view a companies Market cap because it tells you whether the company has future potential, especially if you are a long-term investor.
Authorized shares: (A/S) refer to the maximum number of shares that a corporation is legally permitted to issue. Each company going public depending on the size or value is issues set amount of Authorized shares A/S
Shares outstanding: O/S refer to a company's stock currently held by all its shareholders. The company typically issues a portion of the Authorized shares A/S as Outstanding Shares O/S, including share blocks held by institutional investors and restricted shares owned by the company's officers and insiders.
The float: Refers to the regular shares a company has issued to the public for investors to trade. This figure is derived by taking a company's outstanding shares and subtracting any restricted stock, which is under some sales restriction. Keep in mind the larger the float of a company's stock, the lesser the value of the stock price, and this will prompt companies to enact a reverse split to lesser their float for the price to move higher.
A merger: occurs when shares of one company are traded for another during an acquisition. When, and if, the transaction is approved, shareholders can trade the target company's shares for shares in the acquiring firm's company. After a merge officially takes effect, the stock price of the newly-formed entity usually exceeds the value of each underlying company during its pre-merge stage. A merger can be a good or bad thing depending on the acquiring company size, market cap etc.
A reverse merger: is when a private company becomes a public company by purchasing control of the public company. The shareholders of the private company usually receive large amounts of ownership in the public company and control of its board of directors
The more you trade and surround yourselves with like-minded individuals on or off the web with the same interest, you will eventually learn as you go along. We also recommend joining a chat room, It helps get you up to speed quickly.
Lesson #5 Research and preparation
Due Diligence (DD) can be the difference between being a successful trader. Before taking a trade, as an investor, you have to shrug of laziness and put in the work. DD is the cornerstone of every trader's success.
Due Diligence helps traders minimize risk significantly, especially longer-term traders. It requires an examination of financial records, ownership, new hires, business operations, and a background check on a potential employee when possible. As a result, DD can mitigate risk from a business or investment decision.
For more information on Due diligence visit : Investorpedia .com
News Catalyst: News-The bigger the news, the better!
Day traders prefer FDA news, Merger and Acquisition news, buyouts, big-money deals, and good earning reports. News is the foundation of a gap and goes stock, so to reiterate, the bigger the news, the better. Be aware of the hot sectors. For example, in March 2019, Chinese stocks were running due to trade war positive talks, and Chinese low floater was skyrocketing with and without news.
Share structure: Day traders only focused on the float—the smaller the float, the better chance of a breakout. Day traders typically look for small floaters between 300k-50 million. We trade low floaters from 300k to 20 million. That usually is where we make the most profit.
Note: Stocks with smaller float and low volume sometimes have a big spread, meaning the BID and ASK range are generally large.
Volume: Volume is essential for many reasons, such as getting in and out of stock. A day trader would ideally want to enter a stock when the market opens with a volume of around 500k-2 million. There are times when the volume will be much larger, which is fine but be careful as a crowded stock has a high chance of early selloff. PRICE
Price Per Share Percentage (PPS): If possible, when entering a stock that, try aiming for gappers around the 30-60% area at open that is the sweet spot. because it has room to run and hasn't been over-extended, but as a day trader, we have to be flexible. (Trade the market you are in)
Lesson #5 Placing a Trade
Placing a trade for the first time can be nerve rocking. Although, even as a pro, we are sometimes overcome by emotions and nerves kick in, the potential of a possible win or loss can play on the investor's mind. Though easier said than done, we have to put away emotions and take the trade because there are ways to maximize or minimize your profit or loss.
Stop Loss is an excellent tool for new, intermediate, even pro traders. As the name implies, when set, it automatically sells the trader's position if it goes against them.
Understand the buy and sell platform menu VIA Charles schwab
Buy and Sell, select the option you desire. This option sends data to your broker, letting them know what action to take.
Quantity: Determine the number of shares by buy or seller.
VENUE or ROUTE - Traders have the option of letting your broker choose the market makers(MM) that runs your order by choosing SMART or INTELLIGENT ORDER. You also have the option of selecting specific MM from the drop-down menu.
ORDER TYPE: The two main orders are LIMIT or MARKET orders.
Limit orders are intended to execute your orders at a specific price or target quickly.
Market orders are intended to execute your orders at the market. Your orders can get executed way above or lower than your intended target, depending on the market volatility.
Limit price - The stock price a trader is willing to buy or sell their investment.
TIMING or DURATION -The length of time a trader holds a position. There are a few, but we suggest using only two DAY) and GTC) until traders become more experienced. We recommend Investopedia or youtube for more in-depth information on the other order types after you are done reading here. https://en.wikipedia.org/wiki/Order_(exchange)
Day- As it suggests, your order placed will stay active for the day until filled.
Good-til-canceled Order (GTC) is an order to buy or sell a stock that lasts until traders fill or cancel the order.