How Did I Started Short Term Trading

As mentioned in previous posts, I am more of a long term investor. Yet ironically, I started off as a short term trader before finding my style as a long term investor.

So how did I started as a trader?

Since young I have been observing my dad monitoring stocks on the teletext and doing trades through the phone with his broker.

Those days, fees were exorbitant and there is no luxury like the moomoo app where trading can be done almost instantly by ourselves through the phone!

Anyway one fine day in 1995 or 1996, I decided to try my hands on a trade too. It was a contra trade on a shipping counter which netted me about $300 in less than a week. It was a considerable sum for me back then and I got hooked.

After that there were wins and losses along the way but long story short, I decided to build up an income portfolio through long term investing instead.

Notwithstanding that, I never stopped learning about trading which have so much to learn about. Over the years I still do some trades here and there on stocks and options.

So through this post, I would like to share some of the lessons which I have learned over the years.

First and foremost, no personal feelings should be involved in trading. Only fundamentals, technicals and numbers should be the deciding factors.

Moving on:

If the market is in a weak trend or range, use support / resistance levels as your entry / exit guide.

If the market is in a strong trend, use the 20 ma.

If the market is in a healthy trend, use the 50 ma.

If the market is respecting a trendline, use that trendline.

Possible entry conditions:

1) Enter if the stock falls on XD more than the dividends declared.

2) For range market, price consolidates at resistance. Buy at breakout of resistance.

3) For uptrend, enter at dip, preferably nearer to the uptrend line or 20 dma.

4) If the price is in a healthy trend and respect the 50 ma, wait for a pullback towards the 50 ma and look for a price rejection (dip below 50 ma) before enter.

5) Enter when price hits lower bollinger band and RSI hits oversold (below 30).

6) If the price is above 200 ema on daily chart, trend is bullish.
Identify an area of support where the price could retrace to.
If the price retrace to that area, wait for a higher close.
If price closes higher, enter at next open.

Possible exit conditions:

1) Exit when the price moves into extended technical state:

Often identified by a series of vertical bars in the 60 min chart

Or price could pierce the 3rd or 4th standard deviation of a top or bottom 20 day bollinger band.

2) Exit when price hits a major trendline or previous high / low.

3) Exit when crossovers signal potential trend changes.

4) Declining financials over 4 quarters.

5) If insiders or mega funds are buying to push up the price, sell half or more when the market price shoots >20% above their buying price. When the dust settles, accumulate near the funds' buying price and wait.

6) Exit when price hits upper bollinger band and RSI hits overbought (above 70).

The above are some trading setups that can be applied for short term trading.

I can write a 10,000 words thesis on this topic because there are just so much stuff to write about trading but that will probably on another day.

As always, good luck on your trading and protect your capital, always.