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

209 Pages·2009·2.21 MB·English

by  Josh DiPietro

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The Truth
About Day
Trading Stocks
i
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Founded in 1807, John Wiley & Sons is the oldest independent publish-
ingcompanyintheUnitedStates.WithofficesinNorthAmerica,Europe,
Australia,andAsia,Wileyisgloballycommittedtodevelopingandmarket-
ing print and electronic products and services for our customers’ profes-
sionalandpersonalknowledgeandunderstanding.
TheWileyTradingseriesfeaturesbooksbytraderswhohavesurvived
the market’s ever changing temperament and have prospered—some by
reinventing systems, others by getting back to basics. Whether a novice
trader, professional, or somewhere in-between, these books will provide
theadviceandstrategiesneededtoprospertodayandwellintothefuture.
Foralistofavailabletitles,visitourWebsiteatwww.WileyFinance.com.
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The Truth
About Day
Trading Stocks
A Cautionary Tale About
Hard Challenges and What
It Takes to Succeed
JOSH DIPIETRO
JohnWiley&Sons,Inc.
iii
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Copyright(cid:1)C 2009byJoshDiPietro.Allrightsreserved.
PublishedbyJohnWiley&Sons,Inc.,Hoboken,NewJersey.
PublishedsimultaneouslyinCanada.
Nopartofthispublicationmaybereproduced,storedinaretrievalsystem,ortransmittedin
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LimitofLiability/DisclaimerofWarranty:Whilethepublisherandauthorhaveusedtheirbest
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visitourwebsiteatwww.wiley.com.
LibraryofCongressCataloging-in-PublicationData:
DiPietro,Josh,1976–
Thetruthaboutdaytradingstocks:acautionarytaleabouthardchallenges
andwhatittakestosucceed/JoshDiPietro.
p. cm.–(Wileytradingseries)
Includesindex.
ISBN978-0-470-44848-9(cloth)
1.Daytrading(Securities) 2.Electronictradingofsecurities. I.Title.
HG4515.95.D572009
332.63(cid:2)228–dc22
2008054930
PrintedintheUnitedStatesofAmerica
10 9 8 7 6 5 4 3 2 1
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Iwouldliketodedicatethisbooktoallday-traders,
amateurandprofessional,whohavelearnedthehardway.
Tothetraderswhounderstandthatbecomingasuccessful
day-traderisaprocessthatcannotbefast-tracked.
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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
HowOftenDoYouTrade,andHowProfitably? 10
HowMuchAreYouTradinginCapitalandLeverage? 10
HowLongHaveYouBeenTrading? 12
WhatFinancialInstrumentsAreYouTrading? 13
AreYouTradingOtherPeoples’MoneyorYour
PersonalCapital? 13
AreYouaLicensedTrader,orTradingIndependently? 13
HowWereYouTrained? 14
RulestoRemember 14
CHAPTER 2 How Emotions Can Destroy a Trade 15
TheFearFactor 16
GreedIsNotGood 18
RulestoRemember 21
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viii CONTENTS
CHAPTER 3 Preventing Overconfidence 23
IgnoringYourPredeterminedStop/LossPrice 24
HoldingTooLong 24
RulestoRemember 26
CHAPTER 4 From Impatient to Cool, Calm,
and Collected 27
TheWaitingIstheHardestPart 29
DecidingtoLearnMore 31
RulestoRemember 33
CHAPTER 5 Taking Breaks 35
BreakWhenYourConfidenceIsLow 38
BreakBecauseIt’sJustNotWorking 38
BreakandThenWhat? 39
RulestoRemember 42
PART II The Truth about Your Risk 43
CHAPTER 6 The Importance of Risk Management 45
TheAmountofTradingCapitalAllocatedtoEachTrade 46
TheTimingforAllocatingCapitaltoaTrade 47
OverexposuretoRisk 48
TheStockorCompanyYou’reTrading 49
TheTimeofDayYou’reTrading 49
Gambling 50
RulestoRemember 51
CHAPTER 7 Why Overexposure to the Market
Can Hurt 53
TimeversusTiming 54
RulestoRemember 58