how to make money trading part time1

8/4/2019 How to Make Money Trading Part Time1

1/27

How t o Mak e MoneyTrading Par t T im eHow t o Mak e MoneyTrading Par t T im eBy Chr i s Perrunay Chr i s Perruna

NYC Trader s Ex po

Februar y 2011


2/27

As a rule, you CAN!As a rule, you CAN!

Can you really make money tradingpart time?

Can you really make money tradingpart time?

HOW?HOW?

Lets findout

Lets findout

Where t o BeginWhere t o Begin


3/27

Case St udy Ex am plesCase St udy Ex am ples

Moving Average Reversal Breakout: Buy or Sell?


4/27

In t roduc t ionIn t roduc t ion

Successful Investing through Education

Books & Mentors

Psychology of Trading & General Rules

Essentials of Fundamental Analysis

Master Technical Analysis Screening for Stocks

Making a Watchlist

Money Management Position Sizing

Expectancy

Case Study Examples


5/27

Educat ion

Requi red Reading

Educat ion

Requi red Reading How to Make Money in Stocks (4th edition) by William J. ONeil (1988)

Reminiscences of a Stock Operator by Edwin Lefevre (1923)

The Nature of Risk by Justin Mamis (1991)

Trader Vic: Methods of a Wall Street Master by Victor Sperandeo (1991)

Trade Your Way to Financial Freedom by Van K. Tharp (1999)

The Battle for Investment Survival by Gerald M. Loeb (1935)

Martin Zweig's Winning on Wall Street by Martin Zweig (1986)

How to Trade in Stocks by Jesse Livermore (1940)

Market Wizards: Interviews with Top Traders by Jack D. Schwager (1988)

When to Sell: Inside Strategies for Stock-Market Profits by Justin Mamis (1994)


6/27

"Rule No.1 is never lose money. Rule No.2is never forget rule number one."

- Warren Buffett

"Profits always take care of themselvesbut losses never do."

- Jesse Livermore

Youhavetolearnhowtolose;itismoreimportantthanlearninghowtowin


7/27

Psyc hology o f Trad ingPsyc hology o f Trad ing

General Trading Rules

Develop a working SYSTEM Preservation of capital

Consistent profitability

Cutting losses short

Superior returns

Understanding You: What is your general personality?

What influences your decisions?

What is your lifestyle?


8/27

"If you spend more than 13 minutes analyzingeconomic and market forecasts, you'vewasted 10 minutes."

- Peter Lynch

The only function of economic forecasting isto make astrology look respectable

- John Galbraith


9/27

Essent ia ls o f Fundam ent a l Analys isEssent ia ls o f Fundam ent a l Analys is

Earnings Per Share % Change in Latest Quarters EPS vs. Same Quarter Prior Year

% Increase in Next Years EPS Estimate From Prior Years Actual EPS Annual % EPS Growth Rate of Last 3 Years

Sales/ Revenues % Change Latest Quarters Sales vs. Same Quarter Prior Year

% Change Latest Reported Fiscal Year Sales vs. Prior Year

Annual % Sales Growth Rate of Last 3 Years

Relative Price Strength

Market Capitalization & Share Price


10/27

Successful traders always follow the line ofleast resistance follow the trend thetrend is your friend

- Jesse Livermore

In order of importance to me are: (1) the longterm trend, (2) the current chart pattern and

(3) picking a good spot to buy and sell.- Ed Seykota


11/27

Mast er Tec hnic a l Ana lys isMast er Tec hn ic a l Ana lys is

Candlestick Charts Weekly Charts

Daily Charts

What to Look for:

Properly Forming Bases Major Moving Averages

Volume, Volume, Volume

Pivot Points

Breakout Areas

Point and Figure Charts

New Highs vs. New Lows Ratio


12/27

Candlest ic k Chart sCandlest ic k Chart s

Weekly Chart

Daily Chart


13/27

Poin t & Figure Char t sPo in t & Figure Char t s

General MarketIndividual Stocks


14/27

New High New Low Rat ioNew High New Low Rat io

2003 Turning Point

2009 Turning Point


15/27

Sc reen ing fo r St oc k sSc reen ing fo r St oc k s

Quality Stocks making New 52-week Highs

Quality Stocks with a new IPO within the past two Institutional Sponsorship Increasing

Quality Stocks that are trading within 15% of 52-week

Highs

Quality Stocks within 10% of the 200-day MovingAverage

Quality:

Earnings Per Share (EPS) Rating: From 60 to 99

Relative Price Strength (RS) Rating: From 60 to 99


16/27

Sc reen ing fo r St oc k s

Sam ple Sc reen New Highs


Sam ple Sc reen New Highs


17/27


Sam ple Sc reen IPOs


Sam ple Sc reen IPOs


18/27

Mak ing a Wat c h l is tMak ing a Wat c h l is t

Key selection criteria:

Filter stocks up 1% or more Volume greater than average by at least 50%

Seek stocks that are making multiple screens

Technical criteria:

Identify trend (up or down)

Recognize base

Identify pivot point or breakout area

Establish support and resistance levels


19/27


Moving Average Reversal Breakout: Buy or Sell?


20/27

Money Managem entMoney Managem ent

Position Sizing:

Understand how much money to trade on each position

Know account size & available funds

Determine maximum risk per position

Expectancy:

How much to make (win or lose) for every dollar risked?

How many trades - how much opportunity?

Expectancy = (Probability of Win * Average Win) (Probability

of Loss * Average Loss) (0.4 * $2,500) (0.6 * $625) = $1,000 - $375 = $625 per trade

(40% * 20%) (60% * 5%) = 5.00%

100k account, $12,500 per position or 1% risk:

Win 40% of time, 20% ave gain, 5% ave loss


21/27

Manage Risk w / Posi t ion SizeManage Risk w / Posi t ion Size

The golden rule of trading is to keep losses at a level of 1 R as often aspossible and to make profits that are high-R multiples. - Van K. Tharp


22/27

A trading philosophy is something thatcannot just be transferred from one personto another; its something that you have to

acquire yourself through time and effort- Richard Driehaus

The way to build long-term returns isthrough preservation of capital and home

runs- Stanley Druckenmiller


23/27


Moving Average Reversal: Buy or Sell?


24/27


Moving Average Violation: Buy or Sell?


25/27


Higher Highs and MA Support: Buy, Hold or Sell?


26/27


Moving Average Violation: Buy, Hold or Sell?


27/27

In Clos ingIn Closing

Trading Rules to Live by:

Cut Losses Ride Winners

Keep bets small and manage risk

Follow the rules without question (your proven system)

Hattip:EdSeykotaviaMarketWizards

Theelementsofgoodtradingare:(1)cuttinglosses,(2)cuttinglossesand(3)cuttinglosses. Ifyoucanfollowthesethreerules,youmayhaveachance.

how to make money trading part time1

Documents