Day Trader Tools – Holistic Trading is Healthy Trading

Day Trader Tools – Holistic Trading is Healthy Trading

Ok so I guess you are wondering what in the wide world of sports could the word “holistic” have to do with trading stocks. Well grasshopper, let me explain.

We hear more and more these days about “holistic medicine” where the approach is not to treat the symptom, but rather to treat the entire patient. Which in of itself, will always give the patient a far better, more complete diagnosis.

So then, let’s see how this can apply to trading stocks. And this really was another “ah-moment” for yours truly.

I come across a stock I really like, and find it’s been beaten down 30% in the past month. Hmmm my first impression, this stock is sick, best to stay away.

I come across another stock and it’s up 30% in the past month. That’s what I want, a stock on the rise!

In both cases, I was looking at “the symptom” and not the bigger picture. So then, let’s take a more holistic look at these stocks.

Upon deeper examination my first stock was actually down because the entire sector it is in had been side swiped of late, driving them all down. In fact nothing in particular about this stock warrants it declining.

The Lesson: Just like real estate, I am best to find the most beaten down stock in a great neighbourhood. If it’s the gold and mining sector, then find the stock with the most promise, that has fallen out of favour for no reason, other than it was in that neighbourhood or sector. Sooner than later it will likely have the best chance to appreciate simply by association to it’s peers.

The second stock was up 30%, and the truth here is, the soon to be released news has driven the stock to very frothy and unwarranted levels, based purely on speculation. Sure you can be a winner here, but if that news release doesn’t deliver, your stock’s share price could easily drop off a cliff over night.

The real point here should be obvious. You simply can not buy any stock, short or long term, day trader or value investor, without a little further digging. That digging I call Holistic Trading. Yes, sure it’s more work on your part, but hey, it’s your money, and holistic trading becomes a mini insurance policy if you like.

You should never buy a stock on rumour alone, or on news alone, or on volume alone, or any number of reasons that are taken in isolation. If you can’t tell me at least 3 reasons why you should buy that stock, then you simply have not looked deeper or done your “holistic” homework.

I am a firm believer that holistic trading is healthy trading. And when I need to look a little deeper into the mining, oil and gas stocks I like, I always use the Stock Research Portal.

The site is free with an email subscription. The depth of information available will make you a smarter investor. If used properly, smarter, healthier and in the end, wealthier as well.

About The Author: Mike Perras is a former media executive and faculty of business professor. Today he is a freelance writer and also manages the Canadian Stock Alerts blog. It is updated weekdays in real time, and the primary focus is to find stocks with higher than usual trading volume. Mr. Perras doesn't advocate buying the stocks he mentions. Nothing in this article is either designed to meet readers personal financial situations, or intended or taken to be investment advice.

Day Trader Tools – Level II - Your GPS To Trading Smarter

Day Trader Tools – Level II - Your GPS To Trading Smarter

If you remember flying a kite as a youngster, you certainly remember the thrill of watching the wind magically take control and push your kite skyward.

Now what if you could have a gadget that could tell you exactly where the wind was and wasn’t. Your kite would then stay up there for a lot longer and you would have so much more fun.

Maybe a GPS Wind Meter, a device that could easily tell you to move your kite more to the east or west, capturing the full power of the available wind. Now that would be a tool wouldn’t it?

If you are an experienced day trader you are well aware of where I’m going here. But if you are new to day trading, and want that GPS Wind Meter for trading stocks, it’s called Level II.

You see Level II, doesn’t just show you what the bidders and sellers are thinking, it can actually show you the direction they are going, in real time.

Without Level II you only see the top line bid and ask, or what people are willing to buy and or sell for. Without Level II you simply can not see the depth of the buyers and sellers.

With Level II you can tell if the bidders out number the sellers, if you want to buy, that’s very important. If you are trying to sell and Level II shows you that sellers outnumber buyers, that’s very helpful also.

Here, let me draw you an even better picture. Let’s say you bought a stock at .20 because it has had great volume lately, obviously there is lots of interest.

Then looking deeper into your Level II you notice that there is a very large amount of shares available for sale at .28 , meaning the stock is unlikely to get past .28 without a very large support of buyers. But why all the sellers at .28? Why aren’t they all letting it just letting it go higher.

A little more due diligence and you check to see that 3 months ago the same stock surged to .32 on a huge volume of shares traded. Meaning there are a lot of old buyers still holding shares at that level and now, they simply want out at .28

Just by seeing that on your Level II you can decide to sell comfortably at .27 and just move on and thus, not get caught in that mess at .28 where the stock could easily stall and drift back down into the lower .20’s

Level II is your stock GPS Wind Meter. It tells you in real time which way the buyers and sellers are blowing. Let’s face it, we are never going to always get in and out of a stock at the right price, but knowing which way the wind is blowing allows us to play the game to our advantage, and avoid the many traps out there.

Now, if they only made a Level II type of contraption for flying that kite. It would be the hottest new thing to put under the Christmas tree.

I am a firm believer that Level II will make you a smarter trader. And when I need to look a little deeper into the mining, oil and gas stocks I like, I always use the Stock Research Portal.

The site is free with an email subscription. The depth of information available will make you a smarter investor. If used properly, smarter, healthier and in the end, wealthier as well.

About The Author: Mike Perras is a former media executive and faculty of business professor. Today he is a freelance writer and also manages the Canadian Stock Alerts blog. It is updated weekdays in real time, and the primary focus is to find stocks with higher than usual trading volume. Mr. Perras doesn't advocate buying the stocks he mentions. Nothing in this article is either designed to meet readers personal financial situations, or intended or taken to be investment advice.

Day Trader Tools - The Art of Scalping

Day Trader Tools - The Art of Scalping

Trading well in the stock markets is left to those with the best discipline.

And the Art of Scalping could be the most under rated form of discipline.

The day trader who scalps for no more than 10% and then sells regardless will never go broke, he or she won't ride the big waves of course, but think of it this way

Your $5,000 TFSA, when traded and scalped for 10% profits could look like this

Day 1 - $5,000 invested, a $500 profit earned
Day 2 - $5,000 re-invested, a $500 profit earned
Day 3 - $5,000 re-invested, a $500 profit earned
Day 4 - $5,000 re-invested, a $500 profit earned
Day 5 - $5,000 re-invested, a $500 profit earned

At the end of week 1, no big profit days, but at week's end you are up 50%. Now repeat that in week two, still only investing your original $5,000 TFSA and your original $5,000 is now worth $10,000.00 by the end of week two.

And further, if you did that for 50 weeks, your $5,000.00 TFSA would be worth $130,000.00

Don't be tempted to invest more than your original $5,000.00 for at least a few months, for safety sake.

If you buy 25,000 shares of a .20 stock on the pullback, the stock only has to move up 2 cents and you've earned 10% .. let me give you two great examples:

If you caught the Canadian drilling news at Stock Research Portal on Friday August 14, 2009 for Aura Silver Resources you could have scalped likely a lot more than 10%. As the stock did run on the news from .15 at the open to over .50 during the day on 9 million shares traded.

And just two days prior to the Aura news release, Lydian International had news of their own. News that lifted the stock from the open of .55 to a high that day of .88 on 1.8 million shares traded. So clearly the news matters, but it matters most, when the volume is there to support it.

But as a disciplined process oriented day trader, you take your 10% and say "thank you very much".

So what if you left money on the table, you had a profitable day and in the end, that's the discipline void of any fear or greed. Discipline is not easy I admit, we're all human, but it's that discipline that keeps you from making emotional trading decisions. Emotional trading is death to a day trader!

My strategy is pretty simple, I check the Stock Research Portal for Canadian drilling news releases regularly, then see if higher than usual volume comes in. If it does, I will always wait for a pullback in the share price, ever EVER chase it. On the pullback you are ready for some disciplined stock scalping.

So there you go, "the art of scalping" scenario, and how it can keep you focused, disciplined and in the money.

About The Author: Mike Perras is a former media executive and faculty of business professor. Today he is a freelance writer and also manages the Canadian Stock Alerts blog. It is updated weekdays in real time, and the primary focus is to find stocks with higher than usual trading volume. Mr. Perras doesn't advocate buying the stocks he mentions. Nothing in this article is either designed to meet readers personal financial situations, or intended or taken to be investment advice.

Day Trader Tools - Turning Up The Volume

Day Trader Tools - Turning Up The Volume

If I said "location location location" to you, what comes to mind?

I'm sure you probably said real estate and you'd be right of course. Buying the right location has proven to be the single most profitable lesson to learn in real estate.

When it comes to buying stocks it's not about location, but rather about "volume volume volume". Now if you are unfamiliar with that message as it applies to the stock market, then let me explain.

Someone gives you a great stock tip, or you saw some recent news and want to buy the stock, I say STOP! Unless there is volume, and I mean a lot of shares trading on a regular basis, the stock tip you heard or the news story you read about, can get you trapped in an illiquid stock. Trading a stock properly works best when a lot of shares are trading.

Now, let me give you three quick examples of what I mean. First, I personally use Stock Research Portal to find all my mining drilling news releases. I use it for many reasons, but mostly to get the drilling and discovery news in real time. Then I want to see how the market reacts to that news. And let's be very clear, buying into the news too early doesn't always work.

Let me show you just three examples, 2 stocks had news that affected the volume and one that had news but no effect at all on the volume.

GEM.V - Tuesday August 11, 2009 @ 10:19am - Pele Mountain Announces High-Grade Gold Discovery at Its Highland Project

"TORONTO, ONTARIO--(Marketwire - Aug. 11, 2009) - Pele Mountain Resources Inc. ("Pele" or the "Company") announced today that channel sampling at its Highland Project has returned high-grade gold and associated visible gold at the recently-discovered Lone Ranger occurrence."

GEM opened that day at .10 but the news didn't hit until 10:19am and there was no immediate reaction. Then the volume started. A stock that barely trades 100,000 shares in a day was now doing almost 2 million shares. It was the volume that moved that share price up 50% to .15 not the news on it's own. You see, a news release is just a collection of words on paper, and until the traders trade it, it stays a story unheard. In this case it was heard, the volume tells me that. In fact, it touched .17 the next day or 70% more than just the day before.

Simply by paying attention to the Stock Research Portal for drilling results could have made you some serious money. Now here's another example.

LYD.TO - Wednesday August 12, 2009 @ 8:30am - Lydian Drills 82 Meters at 2.5 g/t Gold and Extends 1M Ounce Resource at its Amulsar Discovery in Armenia

"TORONTO, ONTARIO--(Marketwire - Aug. 12, 2009) - Lydian International Ltd. ("Lydian" or "the Company"), a diversified mineral exploration and development company, today announced the first results from a 14000m step-out drilling program recently initiated at its Amulsar gold discovery in Armenia."

LYD opened at .55 up from the previous close of .41 and it opened that high because the news was released prior to the start of trading at 9:30am, so there was already demand. LYD barely trades 100,000 shares on a normal day, this day it traded almost 2 million shares and that volume drove the price up to .88 . Had you bought the pullback in mid morning, after confirming the volume was in play, you could have bought at .60 and still enjoyed the run to at least .80 for a profit of 33% . Oh darn just 33% in a single day!

As a day trader, I could have invested $10,000 on Tuesday and made 50% on my money. On Wednesday I could have reinvested my $15,000.00 and added another 33% to that, in essence doubling my initial $10,000 in just two trades over just two days.

In case you are getting crazy with excitement and I can easily see why, let me also show the other side of that.

ECR.V - Wednesday August 12, 2009 @ 8:54am - Cartier Reports High Grade Gold Results on Rambull: 27.72 g/t Au over 0.30 m

"VAL-D'OR, QUEBEC--(Marketwire - Aug. 12, 2009) - Cartier Resources Inc. ("Cartier") is pleased to announce new high grade gold results on its Rambull Project near Val-d'Or, Quebec. Channel sampling from recent trenching exposures at surface returned intersections ranging from 10.88 g/t Au over 1.00 meters and up to 27.72 g/t Au over 0.30 meters."

ECR opened at .175 actually half a cent below the previous close, and it only traded 9,000 shares all day. In fact that is far less than their daily average. So what gives here? Val D'Or, Quebec is very hot right now for mining, the company only has about 20 million shares outstanding .. this should have taken off .. should have, but didn't. In time, the news will find the right investors and with so few shares available, the share price could easily triple in a day. But nothing ever happens without volume!

THE LESSON: Never buy the news alone, wait for the volume to confirm the interest in the news. It's true, you may have to buy the stock at a higher price, but at least you won't jump in too soon, and get trapped with no easy exit.

Now I never intended to write a novel here, but I did really want to share my findings and use real life examples of how the strategy applies. The strategy is pretty simple, check the Stock Research Portal for drilling news regularly, then see if higher than usual volume comes in. If it does, wait for a pullback in the share price, never EVER chase it.

So there you have it, a pretty good idea of how the "volume volume volume" scenerio applies.

About The Author: Mike Perras is a former media executive and faculty of business professor. Today he is a freelance writer and also manages the Canadian Stock Alerts blog. It is updated weekdays in real time, and the primary focus is to find stocks with higher than usual trading volume. Mr. Perras doesn't advocate buying the stocks he mentions. Nothing in this article is either designed to meet readers personal financial situations, or intended or taken to be investment advice.

Day Trader Tools - Following The Herd

Day Trader Tools - Following The Herd

I know, you'll never be following the herd, you're a free spirit and a completely independent thinker. Well you know what, we all think that way. But sometimes following the herd, for the right reasons, just makes sense.

Here, let me give you a great example that resonates well for all day traders.

Yesterday (July 13, 2009) Evolving Gold Corp (EVG.V) a Canadian junior mining company, released very positive news after the bell. Today the stock is trading 15 million shares versus the regular few hundred thousand shares per day. Mid morning today the stock is up 42%. The so-called "herd" is day trading like crazy and making some serious cash too. It's always easier to make money when a stock is very liquid and trading heavily.

It opened at .58, up from the previous close of .45, it spiked to .68 mid morning and pulled back to .58 and then flew again to .95 and closed at .84 . Here's what this "herd" day trader was doing .. buying the mid morning pullback at .62 and then selling into heavy volume at .88 for a very cool 42%.

Evolving Gold Corporation is a great example of what the day trader calls home. He or she speculates on the junior plays and in today's case, was very well rewarded. But let's be clear, the support EVG has had up till now, and the huge trading we saw today, was in fact the day trader at work, not institutional buyers. The markets would fall deafly quiet without the support it receives every day, from you and I, the day trader herd.

And you know, when it comes to day trading tools, following the herd can be very profitable. You just need to know "how to" play. Only buy the pullbacks and you'll always live to play another game down the road.

Ok, so the real question here is where can I find this herd anyway? Personally, I always use the Stock Research Portal. They are focused on the sectors I'm most interested in anyway, the mining, oil and gas sectors. It's a highly organized site, not a message board site filled with rumours, distortion and distraction.

Right on the front page of their website they have something called "Companies Most Alerted, by Subscribers". That simply means they are sharing what stocks people search most on their website. In essence, you get a birds eye view of where the "herds" are gathering, and what stocks they are looking at. This is a fabulous tool, and the fastest way to know where the action is, because it's driven by other traders just like you and I.

You can join the Stock Research Portal for free, in exchange for your email address. Well sir, this day trader is happy to give them his email address in exchange for all the great free resources they provide.

So remember, as far as day trader tools go, following the herd, done smartly, can allow you take part in some very profitable stock plays.

About The Author: Mike Perras is a former media executive and faculty of business professor. Today he manages the Canadian Stock Alerts blog. It is updated weekdays in real time, and the primary focus is to find stocks with higher than usual trading volume. Mr. Perras doesn't advocate buying the stocks he mentions. Nothing in this article is either designed to meet readers personal financial situations, or intended or taken to be investment advice.

(Disclosure: No position in Evolving Gold Corp)

Day Trader Tools - Buying The News

Day Trader Tools - Buying The News

Now wait a minute you say. Isn't that suppose to be "buy the rumour, and sell the news"? In a great many cases that works very well too. But we all know that many times, rumours are just that, and the news never arrives.

After many years of trading stocks, I am a personal advocate of following the volume. When a stock has unusually high volume, it's "in play" for what ever reason. There are a great many opportunities here, because the trading is very liquid, meaning it's easy to get in and out.

As an example, when a very good news release comes out, a stock can gain 10% to 25% without too much effort. The dilemma for the day trader is simply, when to buy.

Buying the news can pay off extremely well, and be a powerful day trader tool. Just stay with me here.

Again my strategy is simply, watch for the volume first, telling you it's in play, and then wait, and I mean wait for the pullback. If a stock is $1.00 when the good news hits, it could easily spike to $1.25 and trust me, you don't want to buy at the high, ever! So you wait for a mid morning or mid afternoon pullback to say $1.15 . Level 2 is a great tool to work with as it clearly shows where the buying and selling resistance levels are.

A stock that pulls back will generally always try to retest the earlier high of $1.25 . Now you have some maneuver room as a day trader, buy at $1.15 and sell at $1.25 or wait, and sell at a higher high.

But let me give you a real example at the time of this writing (July 14, 2009). When the market closed yesterday Evolving Gold Corp (EVG.V) a Canadian junior mining company, had a very positive news release.

As far as Day Trader Tools & Buying The News is concerned, it certainly paid off handsomely in this example.

It literally sent the stock skyward this morning. It closed yesterday at .45 and opened at .58 and went on to close at .95 . This stock normally trades no more than a few hundred thousand shares a day, today it traded in excess of 15 million shares. It opened at .58 and spiked up to .68 before the mid-morning pullback hit and it came back to .58, but not for long.

So in this case, you could have easily "bought the news" on the pullback. Say you bought at .62 and within a few hours sold at .88 . No waiting on a rumour that may never materialize, you "bought the news" smartly, and made a cool 42% in one trading day.

Waiting for the pullback forces you to never chase a stock, and you will be tempted many times. If there is no pullback, I just pass, because I know there will always be a pullback, if not today, then likely tomorrow.

The key to all this working for you as a day trader is to read the news almost immediately after it has been released. Personally, I use the Stock Research Portal. I like them primarily because they are focused on the same sectors I am, and that's the mining, oil and gas sectors.

With the Stock Research Portal being so focused, I don't have to wade through 100 news releases just to find a good mining sector news release. I want to read that news as soon as it's released, so I can act quickly, and this site does that for me, because they are so concentrated on the mining, oil and gas sectors.

Of course you'll really like all the other features available on this free site too. You can look at any company's history, shares outstanding, insider trades, sedar reports etc. I guess I'm saying, if you like due diligence, then you'll really come to love this site.

As day traders, we've all bought the rumours, and we've all been burned. At the very least, I suggest you check out the Stock Research Portal and see their very focused news section. I think you'll agree, it's a very impressive site and better still, it's completely free.

About The Author: Mike Perras is a former media executive and faculty of business professor. Today he manages the Canadian Stock Alerts blog. It is updated weekdays in real time, and the primary focus is to find stocks with higher than usual trading volume. Mr. Perras doesn't advocate buying the stocks he mentions. Nothing in this article is either designed to meet readers personal financial situations, or intended or taken to be investment advice.

(Disclosure: No Position in Evolving Gold Corp)