Day Trading For Dummies

Day Trading For Dummies

by Ann C. Logue
Day Trading For Dummies

Day Trading For Dummies

by Ann C. Logue

Paperback(4th ed.)

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Understand how day trading works--and get an action plan

Due to the fluctuating economy, trade wars, and new tax laws, the risks and opportunities for day traders are changing. Now, more than ever, trading can be intimidating due to the different methods and strategies of traders on Wall Street. Day Trading For Dummies provides anyone interested in this quick-action trading with the information they need to get started and maintain their assets.

From classic and renegade strategies to the nitty-gritty of daily trading practices, this book gives you the knowledge and confidence you'll need to keep a cool head, manage risk, and make decisions instantly as you buy and sell your positions.

  • New trading products such as cryptocurrencies
  • Updated information on SEC rules and regulations and tax laws
  • Using options to manage risk and make money
  • Expanded information on programming
  • If you're someone who needs to know a lot about day trading in a short amount of time, this is your place to start.

    Product Details

    ISBN-13: 9781119554080
    Publisher: Wiley
    Publication date: 04/02/2019
    Series: For Dummies Books
    Edition description: 4th ed.
    Pages: 368
    Sales rank: 72,951
    Product dimensions: 7.30(w) x 9.10(h) x 0.90(d)

    About the Author

    Ann C. Logue, MBA, is a lecturer in Finance at the University of Illinois at Chicago. She holds the Chartered Financial Analyst (CFA) designation, and has written about business and finance for Barron's, Entrepreneur, and InvestHedge as well as other publications. Visit her blog and website at

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    Table of Contents

    Introduction 1

    About This Book 2

    Foolish Assumptions 2

    Icons Used in This Book 3

    Where to Go from Here 3

    Part 1: Getting Started With Day Trading 5

    Chapter 1: So You Want to Be a Day Trader 7

    Defining Day Trading: It’s All in a Day’s Work 8

    Committing to Trading As a Business 11

    Identifying the Personality Traits of Successful Day Traders 13

    Seeing What Day Trading Is Not 15

    Chapter 2: Introducing the Financial Markets 19

    Having a Firm Grasp How Markets Work 20

    Opening an Account and Placing an Order 24

    Defining the Principles of Successful Day Trading 25

    Understanding Risk and Return 27

    Differentiating Trading, Investing, and Gambling 34

    Managing the Risks of Day Trading 37

    Chapter 3: Assets 101: Stocks, Bonds, Currencies, and Commodities 39

    Grasping the Different Things to Trade 39

    Defining a Good Day Trading Asset 40

    Taking a Closer Look at Stocks 46

    Examining Bonds 52

    Cashing In with Currency 55

    Considering Commodities and How They Trade 56

    Chapter 4: Assets 102: ETFs, Cryptocurrency, Options, and Derivatives 59

    Explaining Exchange-Traded Funds (ETFs) in Plain English 60

    Getting Familiar with Cryptocurrency 64

    Dealing in Derivatives 69

    Comprehending Arbitrage and the Law of One Price 74

    Chapter 5: Increasing Risk and Potential Return with Short Selling and Leverage 79

    Understanding the Magic of Margin 80

    The Switch-Up of Short Selling 84

    Leveraging All Kinds of Accounts 87

    Borrowing in Your Trading Business 91

    Assessing Risks and Returns from Short Selling and Leverage 93

    Chapter 6: Managing Your Money and Positions 95

    Setting Your Earnings Expectations 96

    Gaining Advantage with a Money-Management Plan 99

    Examining Styles of Money Management 101

    Seeing How Money Management Affects Your Return 106

    Planning for Your Profits 108

    Chapter 7: Planning Your Trades and Trading Your Plans 111

    Starting to Plan Your Trades: Just the Basics, Please 112

    Closing Out Your Position 122

    Maxims and Clichés That Guide and Mislead Traders 123

    Part 2: Developing Your Trading Strategy 129

    Chapter 8: Picture This: Technical Analysis 131

    Comparing Research Techniques Used in Day Trading 132

    Using Technical Analysis 136

    Reading the Charts 143

    Considering Different Approaches to Technical Analysis 148

    Avoiding Technical-Analysis Pitfalls 150

    Chapter 9: Following Market Indicators and Tried-and-True Day Trading Strategies 153

    Psyching Out the Markets 154

    Taking the Temperature of the Market 156

    Measuring Money Flows 163

    Considering Information That Crops Up during the Trading Day 166

    Identifying Anomalies and Traps 169

    Chapter 10: Eliminating Emotion with Program Trading 173

    Creating Your Own Trading Program 174

    Programming, the Day Trading Way 175

    Backtesting Once, Backtesting Twice 177

    Building on Some Standard Strategies 177

    Arbitraging for Fun and Profit 179

    Scalping, the Dangerous Game 182

    Understanding Risk Arbitrage and Its Tools 183

    Examining Arbitrage Strategies 186

    Being Aware of Those Pesky Transaction Costs 191

    Chapter 11: Day Trading for Investors 193

    Recognizing What Investors Can Glean from Traders 193

    Applying Momentum 199

    When an Investor Considers Trading 203

    Chapter 12: Researching Research Services 205

    Understanding the Trade of Trading 206

    Getting the Research You Need 212

    Doing Your Due Diligence 218

    Chapter 13: Determining Your Profit and Your Profit Potential 223

    Before You Trade: Testing Your System 223

    During the Day: Tracking Your Trades 230

    Setting up your spreadsheet 230

    Pulling everything into a profit and loss statement 230

    Keeping a trading diary 232

    After You Trade: Calculating Overall Performance 233

    Reviewing types of return 234

    Calculating returns 234

    Determining the risk to your return 239

    Using benchmarks to evaluate your performance 241

    Part 3: Day Trading, Incorporated 243

    Chapter 14: Setting Up Your Day Trading Like a Business 245

    Planning Your Trading Business 246

    Setting Up Your Trading Laboratory 249

    Getting Mobile with the Markets 252

    Controlling Your Emotions 253

    Chapter 15: Your Key Vendor: Your Broker 261

    Choosing a Brokerage 261

    Discussing Brokers for Day Traders 266

    Being Aware of Brokerage Scams 273

    Chapter 16: Regulation Right Now 275

    Looking Back on the Road to Regulations 276

    Reviewing the Regulators 277

    Working with Brokers’ Rules 284

    Watching Out for Insider Trading 287

    Preparing for Rule Changes in Crisis Conditions 289

    Taking on Partners 290

    Chapter 17: Taxes for Day Traders 291

    Getting the Lay of the Land: What You Need to Know Based on What You Trade 292

    Hiring a Tax Adviser 295

    Doing Your Taxes Yourself 297

    Identifying Income Categories You Need to Know 298

    Tracking Your Investment Expenses 302

    Top Secret Tax Information for IRS-Qualified Traders Only 307

    Discussing Other Important Tax Info: Forms and Deadlines 308

    Using Self-Directed IRAs 309

    Part 4: The Part of Tens 311

    Chapter 18: Ten Good Reasons to Day Trade 313

    You Love Being Independent 313

    You Want to Work Anywhere You Like 314

    You’re Comfortable with Technology 314

    You Want to Eat What You Kill 315

    You Love the Markets 315

    You Have Market Experience 315

    You’ve Studied Trading Systems and Know What Works for You 316

    You’re Decisive and Persistent 316

    You Can Afford to Lose Money 317

    You Have a Support System 318

    Chapter 19: Ten (or So) Good Reasons to Avoid Day Trading 319

    You Want to Discover Investing by Day Trading 320

    You Love Fundamental Research 320

    You’re Short on Time and Capital 321

    You Like Working As Part of a Group 321

    You Can’t Be Bothered with the Details of Running a Business 321

    You Crave Excitement 322

    You’re Impulsive 322

    You Love Going to the Casino 323

    You Have Trouble Setting Boundaries 323

    You Want to Get Rich Quick 324

    The Guy on YouTube Said It Would Work 324

    Chapter 20: Ten Common Day Trading Mistakes 325

    Starting with Unrealistic Expectations 325

    Beginning without a Business and Trading Plan 326

    Ignoring Cash Management 327

    Failing to Manage Risk 327

    Not Committing the Time and Money to Do It Right 328

    Chasing the Herd 328

    Switching between Research Systems 329

    Overtrading 329

    Sticking Too Long with Losing Trades .330

    Getting Too Emotionally Involved 330

    Chapter 21: Ten Tested Money-Management Techniques 331

    Taking Money off the Table 332

    Using Stops 332

    Applying Gann’s 10 Percent Rule 332

    Limiting Your Losses with the Fixed Fractional System 333

    Increasing Returns with the Fixed-Ratio System 333

    Following the Kelly Criterion Formula 334

    Figuring the Amount to Trade with Optimal F 334

    Measuring Risk and Sizing Trades with Monte Carlo Simulation 335

    Taking a Risk with the Martingale System 335

    Throwing It to the Fates 336

    Appendix: Additional Resources For Day Traders 337

    Index 343

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