Synopses & Reviews
The explosive growth and low cost of online trading has created a new class of investor who can now make a living buying and selling stocks over the Internet in a way that was once reserved for Wall Street's most powerful brokerage firms and investment banks. While technology has made entering the "major leagues" easy, staying in is not. Before taking to the fast-paced, high-risk playing field, it's absolutely essential that you have a firm grasp of the rules and a solid game plan. Day Trade Online is the play book novice competitors need to become strong contenders. Written by seasoned practitioner Christopher Farrell, it is a one-stop, step-by-step overview of how to make a successful living, whether full- or part-time, trading via the Internet.
Day trading can be quite lucrative, but only if you know what you are doing. As Farrell points out: "Trading for a living is hard. Trading for a living over the Internet is even harder. There are many challenges and obstacles that confront you. Venturing into this jungle unprepared is a recipe for disaster." This straightforward guide provides the head start and heads up necessary to thrive as an Internet day trader, covering everything from the dangers and pitfalls of trading online to an in-depth analysis of which trading techniques work and which don't.
Day Trade Online presents inside information on the strategies of top trading firms, including the most secretive, misunderstood, and profitable function on Wall Street: exploiting the bid-ask spread. Along with complete details on this rarely revealed methodology, you'll learn about:
* The tools needed to get started in online trading.
* Trading on the NYSE and NASDAQ.
* Which stocks to trade-and which to avoid.
* Beating the specialists and the market makers at their own game.
* The dangers and pitfalls of online brokers.
Most importantly, you will learn to look at ten different stocks and pinpoint which one to trade, when, at what price, and why. With the right know-how, you will then be able to apply this knowledge to every single stock that you screen.
Written for the day trader, by a day trader, this is indispensable reading for anyone looking to join an increasingly popular-and profitable-arena.
"I see the ads on television. Open an account and your first trade is free. Trade as many shares as you'd like for one flat fee. Free real-time quotes. Free market research. Trade stocks. Trade options. With the click of a mouse. It's that easy. Anyone can do it . . . I think back on my time on Wall Street. Does the little guy really have a chance?"-from Day Trade Online.
Yes. You do have a chance-a tremendous opportunity to day trade online. But only if you are prepared. Only if you know what you are getting into. In Day Trade Online, a successful online day trader walks you through the ins and outs of day trading online, and provides you with everything you need to get started and be successful. This step-by-step guide will show you:
* How to choose and use online brokers.
* How to set up an online account.
* What equipment you will need and what it will cost.
* How much capital you need.
* What stocks to trade, when to trade them, when to stay out of the game.
* How to trade on margin-safely and profitably.
* The day trader's secret weapon-a strategy for your trades.
Be prepared. Get Day Trade Online for the tools, tips, and strategies you need to thrive as an Internet day trader. Don't make your first trade without it!
Review
Of the many day-trading books that have made it on the Business Week list in the past year, Farrell's is perhaps the most readable. Unlike the other tomes written by veteran traders, his book really starts from the beginning, explaining how stocks are traded. Then he lays out some basic common sense -day traders should choose their moments carefully, getting in and out of stocks quickly, aiming to "hit singles, not home runs," he writes. He clearly explains the pros and cons of using regular online discount brokerage accounts and advises readers to expect occassional glitches and late order fills as part of the costs of doing business...Ultimately, DAY TRADE ONLINE is most successful at giving the reader a realistic picture of what the life of an online day trader is like.
Synopsis
Be prepared. Get Day Trade Online for the tools, tips, and strategies you need to thrive as an Internet day trader. Don't make your first trade without it
Synopsis
the explosive growth and low cost of online trading has created a new class of investor who can now make a living buying and selling stocks over the Internet in a way that was once reserved for Wall Street's most powerful brokerage firms and investment banks. While technology has made entering the "major leagues" easy, staying in is not. Before taking to the fast-paced, high-risk playing field, it's absolutely essential that you have a firm grasp of the rules and a solid game plan. Day Trade Online is the play book novice competitors need to become strong contenders. Written by seasoned practitioner Christopher Farrell, it is a one-stop, step-by-step overview of how to make a successful living, whether full- or part-time, trading via the Internet. Day trading can be quite lucrative, but only if you know what you are doing. As Farrell points out: "Trading for a living is hard. Trading for a living over the Internet is even harder. There are many challenges and obstacles that confront you. Venturing into this jungle unprepared is a recipe for disaster." This straightforward guide provides the head start and heads up necessary to thrive as an Internet day trader, covering everything from the dangers and pitfalls of trading online to an in-depth analysis of which trading techniques work and which don't. Day Trade Online presents inside information on the strategies of top trading firms, including the most secretive, misunderstood, and profitable function on Wall Street: exploiting the bid-ask spread. Along with complete details on this rarely revealed methodology, you'll learn about:
* The tools needed to get started in online trading
* Trading on the NYSE and NASDAQ
* Which stocks to trade-and which to avoid
* Beating the specialists and the market makers at their own game
* The dangers and pitfalls of online brokers
Most importantly, you will learn to look at ten different stocks and pinpoint which one to trade, when, at what price, and why. With the right know-how, you will then be able to apply this knowledge to every single stock that you screen. Written for the day trader, by a day trader, this is indispensable reading for anyone looking to join an increasingly popular-and profitable-arena.
Synopsis
The First Edition of Day Trade Online became a worldwide phenomenonand reached the Wall Street Journal, New York Times, BusinessWeek, and USA Today business bestseller lists. Since it was first written, the stock market has evolved, and so too have the opportunities for profit. That's why renowned trading expert Christopher Farrell has created a fully revised and updated Second Edition of his popular guide.
Written in a straightforward and accessible style, Day Trade Online, Second Edition provides a comprehensive overview of how to consistently capture profits as you trade stocks over the Internet. It skillfully examines all aspects of this exciting fieldfrom what it takes to get started to an in-depth analysis of which trading techniques work, which don't, and why. Most importantly, this book will show you how to beat Wall Street at its own game, by exploiting the buying and selling of the investing public in the same manner that the Street's most powerful brokerage firms and trading houses do.
Opening with a detailed discussion of how Wall Street worksand what it takes to make it as either a part- or full-time online traderthis reliable resource quickly moves on to reveal the inner workings of the short-term movements of the market and how stocks actually trade. From here, Farrell examines the mechanics of the market maker system, the role of the "specialist" on the New York Stock Exchange (NYSE), and the importance of the bid-ask spread; while laying the groundwork for trading NYSE stocks and National Association of Securities Dealers Automated Quotation (NASDAQ) stocks.
With this information in hand, you'll become familiar with specific strategies that will help you quickly spot trading opportunities and take advantage of short-term inefficiencies in today's market.
Filled with in-depth insights and practical advice, this step-by-step guide will help you:
Get started in online trading, avoid common pitfalls, and make money in any market condition
Incorporate short-term trading techniques that were once only known by highly paid Wall Street traderssuch as the practice of exploiting the bid-ask spreadinto your online trading endeavors
See the market from the perspective of an NYSE specialist or NASDAQ market maker, and profit from this newfound view
Learn why the fair order handling rules and recent changes to the NYSE can be your ticket to profit
Discover how to quickly spot trading opportunities before others, by using the NYSE's specialist system, and its so-called "house edge," to your advantage
And much more
The independent online trader can compete and thrive in a marketplace dominated by large Wall Street trading houses, but only by knowing their secrets and beating them at their own game. The Second Edition of Day Trade Online will show you exactly how.
About the Author
Christopher A. Farrell is a national bestselling author and former Wall Street bond trader who currently runs the Farrell Preferred Stock Arbitrage Fund, LP, a hedge fund. He has been a guest on numerous television and radio programs, including CNBC and BBC World News, featured in magazines such as BusinessWeek and Worth, and has been a guest speaker at MIT. His works have been translated into numerous languages worldwide, including Korean, German, Russian, and Italian. Farrell is also the author of The Day Trader's Survival Guide (HarperCollins). He has over thirteen years of trading experience, and has traded over three billion dollars worth of stock since going out on his own. Farrell is a graduate of Colgate University and can be reached at www.farrelltrading.com.
Table of Contents
Preface.
Acknowledgments.
Introduction.
Section I. NSThe World of the Day Trader.
Chapter 1. NSExploiting the Excesses of Capitalism.
The House Edge.
The Bid-Ask Spread.
Section II. NSIntroduction to Day Trading.
Chapter 2. NSTrading 101: Buying on Bad News and Selling on Good News.
The Mind-Set of an Online Day Trader.
A Buyer When the Market Needs Buyers.
Hit Singles, Not Home Runs.
Brokerage Commissions Can Destroy Profits.
Buy in on Fear, Sell in on Greed.
The Slow Execution.
Is the NYSE an Easier Market to Trade?
Section III. NSHow to Beat Wall Street at Its Own Game.
Chapter 3. NSExploiting Wall Street's Conflict of Interest: Market Orders versus Limit Orders.
Understanding Wall Street's Conflict Interest.
Price Makers versus Price Takers.
The Bargaining Process.
The Process of Price Negotiation: Market versus Limit.
The Limit Order.
Wall Street's Prey.
Prelude to the Bid-Ask Spread.
Chapter 4. NSThe Day Trader's Crystal Ball: Understanding the Bid-Ask Spread.
A Snapshot of a Moving Picture.
The Mechanics of Price Movement: Understanding What Makes a Stock Move Higher.
Example 1: The Quote—A Snapshot of a Moving Picture.
Example 2: The Market Order to Sell—Hitting the Bid.
Example 3: The Market Order to Buy—Lifting the Offer.
Example 4: The Limit Order to Buy—Bidding for Stock.
Day Orders vs Good-Until-Cancelled (GTC) Orders.
Example 5: The Limit Order to Sell—Offering Stock.
Haggling Over Nickels and Dimes.
Example 6: Moving the Stock Higher.
Chapter 5. NSThe Role of the Specialist on the New York Stock Exchange.
Using the Specialist System to Your Advantage.
What If There Was No NYSE Specialist?
Buyer of Last Resort.
Is the Profit the Specialist Makes Justified?
A License to Steal?
The Specialist's Limit Order Book.
Being on Both Sides of the Market.
Narrowing the Bid-Ask Spread.
Wide Spreads Protect the Specialist from Volatility.
Handling a Large Sell Order.
The Real Intentions of the Specialists.
Beware When the Specialist Takes the Other Side of Your Trade.
The Daytrader as a Shadow Specialist.
The NYSE's Fair Order Handling Rules.
Never Reveal Your Hand.
How Can You Determine Where the Specialist Lurks in the Stock?
Jockeying for Position.
How Do You Know Where You Stand in Line?
When in Doubt, Ask the NYSE Floor
Tipping the Odds in Your Favor.
Beware of the Specialist.
Section IV. NSIntroduction to Scalping the NYSE: Taking Food out of the Specialist's Mouth.
Chapter 6. NSThe Day Trader's Secret Weapon: Exploiting the Bid-Ask Spread.
How Can You Possibly Make any Money Trading Stocks That Don't Move?
The Role of the Scalper.
Scalper's Keys to Success.
Hit Singles, Not Home Runs.
Under The Radar.
Make Sure the Order is Routed to the NYSE Floor
Avoid the Glamour Stocks.
Exploiting the Bid-Ask Spread.
Finding the Trade's Sweet Spot.
Instant Replay.
Simplifying a Complex Process.
The Other Moving Parts to This Trade.
Trading Do's and Don't's.
Take a Quick Glance at the Specialist's Order Book.
A Bet with the House?
Is This Too Much Work for Only $100 In Gross Profits?
A Few Words on Risk.
Section V. NSTrading The Market's Momentum: How to Profit From Volatility.
Chapter 7. NSExploiting Market Volatility and Momentum: Strategies For Trading the NYSE's Most Volatile Stocks.
The Specialist and the Upper Hand.
Playing the Gap Open: A Strategy for Betting with the House.
Buying on Bad News.
Betting on the Specialist.
Joining the NYSE Specialist as a Buyer of Last Resort.
An Extreme Case of Buying on the Bid.
The Specialist Goosed the Market.
Riding on the Specialist's Back.
The Parameters of the Gap Opening Trade.
How to Tell If the Opening Trade Will Clear: The Specialist's Limit Order Book.
Sell before the Second Wave.
Trading Tick for Tick with the Market Indexes.
Why Limit Orders Don't Work in a Rally.
Riding the Wave of Momentum.
Using the S&P Futures to Gauge the Sustainability of a Rally.
The Lightning-Fast Market Upsurge: How Offers Vanish in the Vapor Trail.
Stock for Sale Becomes Scarce.
Introduction to the Nasdaq Market: The Role of the Market Makers.
The Stock Market of the Next Hundred Years.
The “Real” Day Trading Firms.
The SOES Bandits.
Tracking the Nasdaq Comp.
A Few Words on Short Selling.
Taking Food Out of the Market Makers' Mouths.
Two Methods for Day Trading Nasdaq Stocks.
The Apple Computer Trade.
Buying Strong Stocks on Pullbacks.
Opening the Stock Abnormally High.
The Dangers of Buying a Strong Stock on the Opening Trade.
Inflicting Heavy Damage on the Market Makers by Attacking their Vulnerability.
Making a Profit at the Expense of the Market Makers.
Chapter 8. NSThe Day Trader's Ticket to the Poorhouse: How I Managed to Lose $12,000 in Less Than 24 Hours.
The Pain of Missing a Trade
How Could the Stock Go Any Lower?
The Terrifying Feeling of Getting Caught in a Downdraft.
A Feeling of Irresistible Greed.
The Need to Break Even.
Buying the Stock for the Third Time.
Murphy's Law.
A Feeling of Devastation.
Abnormally Wide Bid-Ask Spreads.
Trading on Old Price Information.
The Dangers of Attempting to Short-Term Invest Instead of Trade.
Refusing to Cut My Losses.
Going Back into the Stock after Losing Money in It.
Buying Twice as Many Shares.
Choosing to Trade a Volatile Stock on the Afternoon before a Holiday Weekend.
Learning from the Mistake and Moving On.
Can the Quoted Market Always Be Trusted?
A Fool and His Money are Soon Parted.
Appendix A. NSThe Day Trader's Arsenal: Choosing and Using Online Brokers, Negotiating Trade Commissions, Real-Time Quote Systems and the Home Office.
Choosing an Online Broker.
Negotiate the Best Possible Commission Rate.
Make Sure that the Broker Can Route Directly to the NYSE.
Per Share versus Per Trade Commission Rates.
Setting Up at Least Two Accounts.
System Crashes and the Late Fill.
Customer Service, Back Office Problems, and Trade Discrepancies.
The Remedy: Keep Good Trading Records.
The Home Office and the Virtual Trading Floor.
Trading Equipment.
The Psychological Effects of Working from Home.
The Isolation Factor.
Appendix B. NSConsiderations for Trading for a Living: The Allocation of Trading Capital, Using Margin, and The Pattern Day Trader Rule.
The Allocation of Trading Capital.
Part-Time versus Full-Time.
What Is the Pattern Day Trader Rule?
Trading on Margin.
The Margin Call.
The Pros and Cons of Trading Part-Time.
Index.