Troy Noonan - Day Trading QuickStart Guide: The Simplified Beginners Guide to Winning Trade Plans, Conquering the Markets, and Becoming a Successful Day Trader (QuickStart Guides™ - Finance)

Introduction

When you think about day trading, what comes to mind? How do you envision yourself day trading? Are you looking at multiple computer screens, clicking on a chart here, reading a news story there, and watching financial markets all day and night? Are you day trading full time or is it just a side gig? Are you simply learning, exploring, satisfying your curiosity, or are you ready to go all-in? If you have more questions than answers, this book is the guide you are seeking.

Day trading, to me, is not just a thing that I do each day. Its a series of decisions that I make over time. The first decision is whether to day trade at all. How do you know day trading is right for you?

If you think youre ready to dive into day trading, the next question is, Why are you day trading? From there, you face decisions, big decisionsabout your overall trading approach, how to fit trading into your existing lifestyle, and what goals you seek to accomplishand a myriad of smaller decisions about when, what, and how much to buy and sell.

I wrote this book to help you make those decisions. More important, I want to help you ask the right questions and come up with the best answers, beginning with the most important question of all. Why? Why do you want to trade?

You have probably seen other day trading books that tell you about chart patterns and what types of instruments (stocks, forex, futures) to trade. They might tell you about the mechanics of day trading, like chart reading, order entries, and various indicators.

But I have yet to find a book that offers the correct answers to the critical questions, the vital issues that determine success or failure in day trading. Until now, there have been no day trading books that encourage the reader to ask the right questions. I wrote this book to fill the void.

Before I give you more details, let me tell you one reason I am so committed to day trading and why it has become such a huge part of my life. Rewind to the early 1990s: I was backpacking across Europe, taking in the sights and meeting new people.

It was in 1992 when George Soros became famous for breaking the Bank of England. The Hungarian-born hedge fund manager is known for placing large trades in the currency markets. Hes what you call a whale in the foreign exchange (forex) market.

By building a substantial (short) position, Soros began betting that the British pound would fall. For those of you who are brand-new to the trading world, a short position means you are betting that the value of the assetthe British pound in this casewill decline. The year before, Britain had joined the European Exchange Rate Mechanism, or ERM, and pledged to keep its currency within a certain band or range relative to the German mark. This was done by keeping interest rates high relative to Germany.

Believing that the pound had become overvalued relative to the mark, Soros held a $1.5 billion short position through the summer of 1992 and then, according to unconfirmed reports, increased it to $10 billion through September. If the pound stayed in the predefined range, the trade would make a little profit or maybe lose some. But if Soros was correct, a decline in the pound could yield hefty profits.

It was on September 16, 1992, that the British government realized it could no longer prop up its currency and abandoned the ERM. The next day, the British pound suffered a 15% drop against the German mark, and it is estimated that Soros banked $1 billion in profits.

It was considered the greatest currency, or forex, trade ever made, but it also highlights how a combination of skill, luck and guts can lead to large profits in trading. Was Soros expecting to bank some of the biggest profits in the history of trading, or was this merely a stroke of good fortune? My guess is that he had confidence in the approach and was willing to take a substantial risk. Soros was probably lucky in the sense that the realized profits were massive, but it was his skilland probably a fair amount of researchthat put him in a situation to achieve the $1 billion gain.

As day traders, that is all we can reasonably do. That is, we can develop positive expectations about potential outcomes, but only after we do the necessary workwhich I call ditch diggingto build confidence in our approach or point of view. Will we always be right? No. Will we always be wrong? Not likely. Will we possibly hit one out of the park like Soros did and make a substantial profit? Yes, when we have the right mix of skill, luck, and the necessary preproduction work under our belt.

Speaking of luck, I was betting against the British pound at the same time as Soros. However, rather than shorting it against the German mark, my play was against the US dollar. This was when I was just beginning to recognize common chart patterns that could lead to good trades and I noticed a shorting opportunity.

Prior to that, I (like most investors at the time) used a full-service broker who would take my orders over the phone. We would discuss various ideas and scenarios. Then he would place the trades in my account for me. I did really well with this full-service broker. Until I lost it all in one day!

After the pain of wiping out my account with my full-service broker (a horror story that many traders suffer at some point in their trading careers), I decided to start using my own strategies. I had no idea what Soros was trading at the time, but we were on the same page when it came to the British pound, and when the currency lost 15% in one day, I scored my biggest win as a trader.

I took some of the profits to fund a long backpacking trip through Europe. While I was there, I bought a set of bongos and, as I traveled around to various cities, I played with other musicians in parks, bars, and cafs. One of the other musiciansa mandolin player from Venezuelabecame a close friend, and later, in 1995, invited me to visit him in Caracas. I did that, and, within 24 hours of my arrival, I met my wife of 25 years.

So, while Soros made his billions, I made a wife. I like to say that finding her, in the way that it happened, was the best trade of my life.

During my second backpacking trip around Europe in the late 1990s, the world was changing fast and internet cafs were popping up all over European cities. Even the smallest towns in remote locations seemed to have a caf with internet access. This was also the infancy of online trading, when brokers started leveraging new technologies and the internet to develop innovative platforms for day traders like me.

As I moved from one city to the next across Europe, it was striking just how easy it was to log in to my account and trade from anywhere in the world. More important, my account balance was growing, and I felt empowered because, while I was traveling the world and seeing beautiful places, I was also making money using computers and the internet. It cant get any better than this , I thought.