The Truth About Day Trading Stocks: A Cautionary Tale About Hard Challenges and What It Takes To Succeed

The Truth About Day Trading Stocks: A Cautionary Tale About Hard Challenges and What It Takes To Succeed

by Josh DiPietro

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Overview

The Truth About Day Trading Stocks

A realistic guide to day trading today's stock market

In terms of the potential for heavy financial losses, day trading is a high-risk profession. No one should contemplate day trading without giving thought to the ways he can lose, and all the ways to lessen or avoid them. Yet many people enter the game with unrealistic expectations, unaware of what it takes to succeed. Seminars and software alone do not make a successful day trader, cautions author Josh DiPietro. Instead, a trader must learn hard lessons of self-discipline, consistency, and staying in the game for the long haul to have a real chance of success. In The Truth About Day Trading Stocks, DiPietro offers the amateur day trader a brutally honest look at the pitfalls of day trading—and how to hopefully avoid them.

Written in an engaging and sometimes humorous tone, The Truth About Day Trading Stocks draws on the author's own experiences as a day trader to offer a clear-cut departure from typical "golden goose" strategies promising instant wealth. Instead, he attempts to slow down the dangerous fervor of the average amateur and demonstrate the ways you can become a professional and not lose your shirt in the process. The Truth About Day Trading Stocks shows how trading decisions are bent and shaped by emotions, and why it is critical to know yourself, understand risk, and remember that increasing your skill level is a gradual, ongoing process—there's always more to learn! After dispensing with popular illusions, DiPietro proceeds to offer realistic, practical trading advice—comparing pay-per-trade with pay-per-share brokers, determining which works best and when, offering suggestions on how to avoid the prospect of perfect trades turning ugly, and more. At the end of the book, he also includes a section called "Rules to Remember," a list of over eighty rules, simply stated and easy to grasp, to benefit amateurs' performance.

Throughout the book, the author describes his development of acute self-awareness while figuring out how to succeed. Through that blunt self-portrayal, the goal of The Truth About Day Trading Stocks is to help you create a disciplined mind-set and apply it to your own successful trading style.

Product Details

ISBN-13: 9780470495858
Publisher: Wiley
Publication date: 05/27/2009
Series: Wiley Trading , #421
Sold by: Barnes & Noble
Format: NOOK Book
Pages: 208
File size: 1 MB

About the Author

JOSH DIPIETRO has been day trading stocks for ten years. He operates a web site (www.daytraderjosh.com) and provides training programs for aspiring day traders. DiPietro's trading approach involves making many trades every day, taking small profits, exiting losing trades quickly, and minimizing transaction costs. He is a critic of the educational paths offered by the established trading industry and is dedicated to providing an alternative educational approach for aspiring traders.

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Table of Contents

Preface xiii

Acknowledgments xvii

Introduction: The Wholehearted Amateur 1

PART I Psychological Truths and What to Do about Them 5

CHAPTER 1 Truths about Yourself to Know First 7

How Often Do You Trade, and How Profitably? 10

How Much Are You Trading in Capital and Leverage? 10

How Long Have You Been Trading? 12

What Financial Instruments Are You Trading? 13

Are You Trading Other Peoples’ Money or Your Personal Capital? 13

Are You a Licensed Trader, or Trading Independently? 13

How Were You Trained? 14

Rules to Remember 14

CHAPTER 2 How Emotions Can Destroy a Trade 15

The Fear Factor 16

Greed Is Not Good 18

Rules to Remember 21

CHAPTER 3 Preventing Overconfidence 23

Ignoring Your Predetermined Stop/Loss Price 24

Holding Too Long 24

Rules to Remember 26

CHAPTER 4 From Impatient to Cool, Calm, and Collected 27

The Waiting Is the Hardest Part 29

Deciding to Learn More 31

Rules to Remember 33

CHAPTER 5 Taking Breaks 35

Break When Your Confidence Is Low 38

Break Because It’s Just Not Working 38

Break and Then What? 39

Rules to Remember 42

PART II The Truth about Your Risk 43

CHAPTER 6 The Importance of Risk Management 45

The Amount of Trading Capital Allocated to Each Trade 46

The Timing for Allocating Capital to a Trade 47

Overexposure to Risk 48

The Stock or Company You’re Trading 49

The Time of Day You’re Trading 49

Gambling 50

Rules to Remember 51

CHAPTER 7 Why Overexposure to the Market Can Hurt 53

Time versus Timing 54

Rules to Remember 58

CHAPTER 8 Budgeting: Knowing Your Financial Limitations 59

Don’t Quit Your Day Job: Catch-22 60

Crunching the Numbers 62

Cushion Cash 63

Rules to Remember 64

CHAPTER 9 Minimizing Your Risk with Stop/Loss 65

Making Stop/Loss Automatic 65

Rules to Remember 71

CHAPTER 10 Averaging-Down: A Skilled Strategy 73

To Average-Down Successfully Takes Mastery 74

Know-How Doesn’t Grow Overnight 75

Rules to Remember 77

CHAPTER 11 Gambling versus Day Trading 79

Rules to Remember 82

PART III Intraday Trading Truths 83

CHAPTER 12 Why Some Traders Make

More Mistakes 85

Pick Your Stocks Carefully 86

Focus, Focus, Focus 87

Pay Attention to Market-Moving News 90

Rules to Remember 91

CHAPTER 13 Trading Consistently All Day 93

Rules to Remember 98

CHAPTER 14 Stock Picking: Simplifying the Process 99

Your Stock Should Have an Average Daily Volume of One Million Shares or More 100

Choose Stocks between $10 and $100 101

Pick Stocks That Display Tradable Intraday Price Swings 102

Don’t Trade Stocks Affected by Strict Federal Regulations 102

Beware of Stocks Directly Affected by Current News Headlines 104

Rules to Remember 105

CHAPTER 15 Why News Can Be Just Noise 107

Trading on News versus Monitoring News 109

Rules to Remember 111

PART IV The Truth about Training and Preparation 113

CHAPTER 16 About Those Training Programs 115

Seminars for the Greenhorns 116

Training Programs for the More Experienced Trader 119

Tips for Selecting the Right Program 120

Rules to Remember 123

CHAPTER 17 Picking the Right Online Broker: Pay-per-Share versus Pay-per-Trade 125

Starting Out with Pay-per-Trade 125

Transitioning to Pay-per-Share 126

High Leverage Pros and Cons 130

Hang on to Your Pay-per-Trade Account 131

Rules to Remember 132

CHAPTER 18 Paper-Trading Strategy 133

Paper Trading for the Amateur 134

A Word about Advanced Paper Trading 139

Rules to Remember 140

CHAPTER 19 Trading for Skill versus Trading for Income 141

Building a Foundation of Trading Skills 141

First Level 144

Second Level 146

Third Level 147

Summary 148

Rules to Remember 150

CHAPTER 20 The Perfect Trading Day 151

Early Morning Activities 151

Pre-market Trading 153

The Opening Bell 156

Midday Activities 157

The Last Hour of Trading 159

The Closing Bell 160

After-Market Trading 160

Homework 161

CHAPTER 21 The Worst Trading Day 163

Early Morning Activities 163

Premarket Trading 164

The Opening Bell 166

Midday Activities 166

Last Hour of Trading 167

The Closing Bell 168

After-Market Trading 168

Homework 169

Conclusion: Parting Words 171

Appendix: Rules to Remember 175

About the Author 181

Index 183

CHAPTER 2 How Emotions Can Destroy a Trade.

The Fear Factor.

Greed Is Not Good.

Rules to Remember.

CHAPTER 3 Preventing Overconfidence.

Ignoring Your Predetermined Stop/Loss Price.

Holding Too Long.

Rules to Remember.

CHAPTER 4 From Impatient to Cool, Calm, and Collected.

The Waiting is the Hardest Part.

Deciding to Learn More.

Rules to Remember.

CHAPTER 5 Taking Breaks.

Break When Your Confidence is Low.

Break Because It's Just Not Working.

Break and Then What?

Rules to Remember.

PART II The Truth About Your Risk.

CHAPTER 6 The Importance of Risk Management.

The Amount of Trading Capital Allocated to Each Trade.

The Timing for Allocating Capital to a Trade.

Overexposure to Risk.

The Stock or Company You'Re Trading.

The Time of Day You're Trading.

Gambling.

Rules to Remember.

CHAPTER 7 Why Overexposure to the Market Can Hurt.

Time versus Timing.

Rules to Remember.

CHAPTER 8 Budgeting: Knowing Your Financial Limitations.

Don't Quit Your Day Job: Catch-22.

Crunching the Numbers.

Cushion Cash.

Rules to Remember.

CHAPTER 9 Minimizing Your Risk with Stop/Loss.

Making Stop/Loss Automatic.

Rules to Remember.

CHAPTER 10 Averaging-Down: A Skilled Strategy.

To Average-Down Successfully Takes Mastery.

Know-How Doesn't Grow Overnight.

Rules to Remember.

CHAPTER 11 Gambling versus Day Trading.

Rules to Remember.

PART III Intraday Trading Truths.

CHAPTER 12 Why Some Traders Make More Mistakes.

Pick Your Stocks Carefully.

Focus, Focus, Focus.

Pay Attention to Market-Moving News.

Rules to Remember.

CHAPTER 13 Trading Consistently All Day.

Rules to Remember.

CHAPTER 14 Stock Picking: Simplifying the Process.

Your Stock Should Have an Average Daily Volume of One Million Shares or More.

Choose Stocks between $10 and $100.

Pick Stocks That Display Tradable Intraday Price Swings.

Don't Trade Stocks Affected by Strict Federal Regulations.

Beware of Stocks Directly Affected by Current News Headlines.

Rules to Remember.

CHAPTER 15 Why News Can Be Just Noise.

Trading on News versus Monitoring News.

Rules to Remember.

PART IV The Truth About Training and Preparation.

CHAPTER 16 About Those Training Programs.

Seminars for the Greenhorns.

Training Programs for the More Experienced Trader.

Tips for Selecting the Right Program.

Rules to Remember.

CHAPTER 17 Picking the Right Online Broker: Pay-per-Share versus Pay-per-Trade.

Starting Out with Pay-per-Trade.

Transitioning to Pay-per-Share.

High Leverage Pros and Cons.

Hang on to Your Pay-Per-Trade Account.

Rules to Remember.

CHAPTER 18 Paper-Trading Strategy.

Paper Trading for the Amateur.

A Word About Advanced Paper Trading.

Rules to Remember.

CHAPTER 19 Trading for Skill versus Trading for Income.

Building a Foundation of Trading Skills.

First Level.

Second Level.

Third Level.

Summary.

Rules to Remember.

CHAPTER 20 The Perfect Trading Day.

Early Morning Activities.

Pre-Market Trading.

The Opening Bell.

Midday Activities.

The Last Hour of Trading.

The Closing Bell.

After-Market Trading.

Homework.

CHAPTER 21 The Worst Trading Day.

Early Morning Activities.

Premarket Trading.

The Opening Bell.

Mid-Day Activities.

Last Hour of Trading.

The Closing Bell.

After-Market Trading.

Homework.

Conclusion: Parting Words.

Appendix: Rules to Remember.

About the Author.

Index.

Customer Reviews

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The Truth About Day Trading Stocks: A Cautionary Tale About Hard Challenges and What It Takes To Succeed 5 out of 5 based on 0 ratings. 12 reviews.
Anonymous More than 1 year ago
I purchased this book at a friends suggestion. This book is a glimpse into the reality of trading. It describes the personal journey of the author as he pursued the active trading life. The book is the precursor to the 20 Day Trading Course which I highly recommend.
JoseLH More than 1 year ago
This is an honest to goodness realistic experience that one will expect into the journey of a life of a trader, no icing on the cake, just plain and straight to the point guide for beginner trader like me. I highly recommend this book and will include this as a must read books for traders. I have attended and bought traders course before, but this book will be my guide on my learning curve.
ricardo99 More than 1 year ago
Having worked many years in the financial field, formerly as a CPA and currently as a Series 7 securities representative, I have always wanted to pursue trading full time. While reading Stocks, Futures and Options Magazine I saw an article by Josh DiPietro describing some interesting insights into day-trading which led me to his book The Truth About Day Trading Stocks. This book presents honest and realistic guidelines for anyone wanting to succeed in day-trading. As most people know who have casually thrown money into trades, the stock market can be an unforgiving minefield ready to destroy the uninformed novice. The author presents an understandable, disciplined and oftentimes humorous approach to learning the intricacies of trading. The author also offers a Mentorship program which is my next step in learning the art/science of day-trading. I would definitely recommend this book to anyone who is willing to treat trading as a business requiring knowledge and discipline for success.
XeniaFL More than 1 year ago
I was searching for financial books regarding Technical Trading and just stumbled onto Josh DiPietro's recently published book "The Truth About Day Trading Stocks: A cautionary Tale About Hard Challenges and What it Takes to Succeed (Wily Trading)" and was fascinated by the simplicity of it all. I am a graduate Engineer by education and really do like logical explanations for sometimes complex studies. If someone really wants to be a "Scalp" Day Trader I recommend without any question this book as it reminds me of a "How To" manual that tells you specifically how to do this with a lot of hard work and discipline. It is like a cook book that has all of the important ingredients listed and explained telling how each will be important and must be added to the readers understanding before they go "live"; i.e. trading with real money. I will be taking the Author's Mentorship Program very soon but have had the opportunity to use the recommended Demo Pay Per Share Platform available from LightSpeed and have found the many important things stressed by the Author to ring true. One thing that I found to be very important was his insistence in telling me the reader that one cannot expect to be a successful Day Trader immediately only after reading this book or taking his Mentorship Program but only after many weeks or maybe months of studying, practicing and very carefully trading live,,,, you know,,, with your own hard earned money. Good Trading
amentrader More than 1 year ago
I came across Josh's approach in an interview in Stocks and Commodities magazine. It was there that I learned about this book. I loved the interview so much that I bought the book. I love Josh's approach, into which he gives some further insight in this book. Mind you, he doesn't entirely reveal his trading method - For that you'll need to partake of his mentorship program. However, he does reveal enough to let you decide whether his approach matches your trading style. Josh has a trading philosophy and approach that has always been something I've been seeking, but could never quite find until now. He likes to severely limit risk such that you really shouldn't blow out your trading account. In fact, I'd go so far to say that if you follow the method you shouldn't really have a losing day. But to all those who find that alluring, be aware that the trade-off is a limit to the upside. For example you'll probably not ever make $4000 in a day either. His approach matches my ideal trading style perfectly.
Anonymous More than 1 year ago
trade2018 More than 1 year ago
I read this book first, it also very well written, but the system is out of date. Although, josh give tons of very valuable generalized trading tips that still work to this day.
Anonymous More than 1 year ago
Just read, and then realized Josh DiPietro has a newer book with his new swing trading system. I just bought Day Trading Stocks The Wall Street Way.I also plan to enter into his trading program. I have no doubt 2018 is going to be great year to swing trade the market.
Darren1967 More than 1 year ago
If you are searching around on Amazon for a book that will get you started in day trading, this is it. Josh DiPietro will give you the straight truth about the reality of being a day trader. It is a career choice like any other. It takes hard work to become successful. Almost every beginning trader blows out their account before learning to manage risk. You can read books and take seminars but only real trading will make you successful. I have been a trader for over 6 years and I agree completely with these observations from the author. Josh's key points are to start with 100 share blocks only, to limit exposure and build skill. Do not move above this amount until you have been successful for months, then only increase trade size very gradually. You can make money trading 100 shares at a time through out the day. This also keeps your emotions under control when no one trade has to much riding on it. Use preset stop losses if your trade goes against you. Most amateurs make the mistake of stubbornly holding losing positions or even increase their position on the way down, this can be disastrous. The key to day trading success is consistency, making the money you need daily, by having a great win ratio. Josh's system is scalping .20 cents to .40 cents off nice steady consumer staple stocks that trade at least a million shares daily on the market. He uses the previous days support and resistance levels as a trading range along with volume. His trading seems to be primarily counter trend, shorting at break outs to new highs and going long at support to try to catch retracements to profit. I have used this system in range bound markets for much success. So I can say his system is sound from my personal experience. He also wants to avoid stocks if they are in the news or earnings are expected, because that will disrupt the range and lead to volatility and trends.
Anonymous More than 1 year ago
Awesome read!Deff a lot of great advice,but day trader josh's newest system is mapped out in his 2nd book.Gotta read that too.
Anonymous More than 1 year ago
I love Josh's approach, into which he gives some further insight in this book. Mind you, he doesn't entirely reveal his trading method - For that you'll need to partake of his mentorship program. However, he does reveal enough to let you decide whether his approach matches your trading style.
Anonymous More than 1 year ago
I loved Josh's insights, this info is a bit out dates since he doesnt scalp trade anymore,but the general principles still apply to his counter-trend trading system. Im reading his current book now.I look forward to starting his training program next week.