Can you trade for me?

In a word, no. This site is meant to be an online diary of sorts, and not a hands-off automated trading system. Plus, I'd hate to be responsible for managing (and quite possibly, losing) the hard-earned money of others.

Can you show me how to trade like you do?

Not really, unfortunately. I can explain the strategy I use, but I literally spent over 20 years trying to become successful making money in the stock market. I've paid plenty of "tuition," as they say - losing money over and over until I finally found something that worked for me. This certainly wasn't an overnight success; I spent lots of time studying and learning over the years before I became fortunate enough to finally succeed. I guess persistence pays...

What style of trader are you? Long term buy-and-hold? Day-trader? Something else?

Funny, I've always thought of myself as a swing trader. However, I've joked that, due to the recent volatility in the market, coupled with my desire to get out of losing trades in a hurry, I've become something of an "accidental day trader." Another term for what I do, at times, though, is called scalping. I guess you could say I am something of a hybrid swing trader / day trader / scalper. It really depends on each individual trade. Also, I consider myself an entirely technical trader, which means I really only care about charts instead of fundamental aspects of companies. (See other FAQ's below that define "swing trading," "day trading," and "scalping" in more detail.)

What are some basic tips for beginners?

Oh man, where do I even begin? Here's a basic list, without spending an eternity trying to come up with the perfect list:

• Rule #1 is to never trade more than you can afford to lose.
• Study, study, study. I am constantly looking at stock charts, and I spent years learning various patterns to look for.
• Be patient. Trading success typically doesn't come overnight.
• Be humble. A winning streak is great, but the market has a way of bringing you right back down to reality real quick.
• Know thyself. If you try to employ a trading style that just doesn't seem to be working for you, even if it works for others, that may mean it's just not the right fit for you.
• Never be shy about getting out of a trade that's gone against you. It's better to keep losses small than to allow a trade to lose more and more money.
• Likewise, don't hesitate to cash out gains when a trade is profitable. You're unlikely to take profits at the exact peak of a trade, so you're much better off locking in gains.
• Try to avoid FOMO (Fear of Missing Out). It's awfully easy to see a stock or ETF taking off and cause you to want to jump into it right away. Unfortunately, that often backfires. You're better off being patient and awaiting a better opportunity.
• In bull markets, it's typical for stocks/ETF's to start the day down, but then close higher. In bear markets, it's just the opposite - stocks/ETF's may start the day higher, but close lower.
• I find it much easier to trade in markets that have a clearly defined direction, either bullish or bearish. In my opinion, it's much more difficult to trade when the market seems to be going sideways with no strong evidence pointing in either direction.
• It takes volume to move a stock/ETF. When looking at stock/ETF prices, always keep an eye on volume as well. The higher the volume, the more conviction you can have in the direction the stock/ETF is moving.
• It's generally a good idea to avoid trading during the first 15 to 30 minutes of the trading day. A lot of the action happening during that time is the result of automatic trades kicking in at the market open. It's best to let things settle down a bit, unless you're extremely confident in a trade entry at that time.

Why is your site called "The Passionate Trader?"

In a nutshell, it's because I truly am passionate about trading. I can study charts all day long and seemingly never get tired of it. It never feels like work to me - it's something I truly enjoy. Of course, it's a heck of a lot more fun when trades are profitable, but every losing trade is a learning opportunity.

You trade frequently. Won't that become a tax nightmare?

I do all of my trading within IRA's, both traditional and Roth. These types of accounts are not taxed when making trades. To take a quote directly from Zacks:

"Investment trades inside your individual retirement account occur without creating a taxable event. Capital gains, dividend payments and interest income are all treated the same: They are not taxed as long as the money remains in your IRA. Distributions from your IRA might or might not be taxed as ordinary income, depending on whether you have a traditional or Roth IRA, and whether your distributions are qualified. Non-qualified distributions might also be subject to an additional tax penalty."

Can I trade like you do in my 401k?

That depends. Many (most?) 401k's will only allow you to select specific funds or other investment vehicles, but generally not individual stocks and/or ETF's. I know some 401k's do allow for people to manage their investments entirely on their own, if they so choose. I happened to have a Fidelity 401k that included something called "BrokerageLink," which allowed me to manage my savings in basically any way I wanted.

What do you think of [XYZ] stock?

Basically, I don't think anything of it. I rarely pay any attention to any individual stocks, and I tend to go out of my way to avoid consuming any "news" about any stocks. Why? Because none of it can be trusted. Quite often, news is generated by the "big guys" (hedge funds, etc.) for the specific purpose of manipulating the price of a stock. I simply don't trust anything spewed by Wall Street or financial "news."

What are some good stocks to buy?

No idea. I mostly care about the overall market trend and what a certain subset of ETF's are doing. I may glance at some popular stocks here and there, just to get a general sense of what's going on in the market, but that's pretty much the extent of it. My strategy really doesn't involve deciding which specific stocks are worth owning.

I read/heard this, that, and the other thing about [XYZ] stock. Should I buy it?

Probably not. As I mentioned above, I don't trust anything spewed by talking heads or websites claiming to be "professionals." It took me a while, but I learned that nothing can be trusted when it comes to investing in the stock market. It's a good idea to have a healthy sense of paranoia, because it's all too easy for a major player to pump "news" stories to the media outlets than can significantly influence the price of a stock. In general, never trust stock tips.

What's an ETF?

An ETF is an Exchange-Traded Fund. Investopedia has a good explanation of what ETF's are:

An exchange-traded fund (ETF) is a type of pooled investment security that operates much like a mutual fund. Typically, ETFs will track a particular index, sector, commodity, or other assets, but unlike mutual funds, ETFs can be purchased or sold on a stock exchange the same way that a regular stock can.

What is swing trading?

Again, Investopedia to the rescue, with a perfect definition of swing trading:

Swing trading is a style of trading that attempts to capture short- to medium-term gains in a stock (or any financial instrument) over a period of a few days to several weeks. Swing traders primarily use technical analysis to look for trading opportunities.

What is day trading?

From Investopedia:

Day trading means buying and selling a batch of securities within a day, or even within seconds. It has nothing to do with investing in the traditional sense. It is exploiting the inevitable up-and-down price movements that occur during a trading session.

What is scalping?

According to Investopedia:

Scalping is a trading style that specializes in profiting off of small price changes and making a fast profit off reselling. In day trading, scalping is a term for a strategy to prioritize making high volumes off small profits.

How will I know if trades you enter are scalps, day trades, or swing trades?

When I enter a trade, I typically do not know what type of trade it will become. If I don't like the chart action, I may get out right away, or I may try to give it more room to run. Sometimes it comes down to how my recent series of trades have gone. If I have a string of losses, I may keep a really short leash on a trade, just to try to lock in some small gains as a confidence booster. Other times, I may have really strong conviction in a trade and let it run for several days. It's never a terrible idea to cut a trade short if you've got gains in it, though.

On a related note, in general, the more conviction I have in a trade, the longer I am willing to hold on for the ride. "Fair" conviction may be more likely to result in a scalp, while "Extreme" conviction may lead to a longer-term swing trade.

How do you know what to buy?

I maintain a watch list of the ETF's that I am most likely to trade (there is a full list further down this page). I keep a close eye on the ETF's in that list, and if I notice any of them are moving significantly on high-volume, I'll take a closer look to see if they may be worth buying. From there, I'll study the 5-minute chart, daily chart, and weekly charts to see if there looks like a reasonable entry point. There really are no hard and fast rules to this; it's much more an art than anything else.

One other technique I use is to closely watch what the ETF's are doing during the last five to fifteen minutes of the trading day. Often, the powers that be will put the prices of the stock/ETF at precisely the point they want it to be right at the end of the day, regardless of what activity took place during the rest of the day.

It greatly helps to know which direction the overall market is heading as well. It's very difficult to swim against the tide, so it's generally a better idea to buy ETF's that correspond to the greater market direction rather than buying their inverses.

How do you know when to buy?

Honestly, I don't. I mean, there are no hard-and-fast rules to it. I do pay attention to the overall market trends, as well as to the world going on around me. For example, if gas prices have been going down, maybe it's a good time to look at KOLD. From there, it's a matter of studying charts, being aware of specific chart patterns (which work on any timeframe), and deciding if a chart looks like a good setup to be able to jump into a trade. FYI, chart patterns are described by Investopedia in the following manner:

Stock chart patterns often signal transitions between rising and falling trends. A price pattern is a recognizable configuration of price movement identified using a series of trendlines and/or curves.

Why do you often buy stocks when their price is relatively high? I thought the idea was to buy low and sell high.

Every trader has a different strategy. Since I'm a student of Investor's Business Daily, I have essentially adopted lots of their philosophies. One such philosophy is that stocks that are falling in price will continue to fall, while stocks reaching new highs often continue to move higher. Rather than thinking of it as, "Buy low, sell high," it's better to think of it as, "Buy high, sell higher." Otherwise, you may find yourself, "trying to catch falling knives," as they say.

Why do you primarily trade ETF's instead of stocks?

Originally, I never intended to trade ETF's. I tried various trading strategies over the years, all of which involved individual stocks. I'm a student of Investor's Business Daily (IBD) and their "CANSLIM" methods, though, and many years ago, I used to follow their "Leaderboard." Leaderboard was (and probably still is) a list of stocks IBD considered to be the best stocks in the market. I used to try to trade some of the stocks in Leaderboard, but I'd always lose money on the trades. I did notice that IBD offered a far simpler option as well: when they determined that the market was an uptrending, bull market, one should buy shares of QQQ (which represents the NASDAQ 100). When the market turned downward, one should sell QQQ. Simple as that. For whatever reason, I never gave the simpler method a try, but it always stayed in the back of my mind.

Fast forward to the beginning of 2022, at a time when my wife and I decided to take our investments into our own hands. I decided I could use the years of knowledge I'd gained trying to trade and couple it with trading ETF's. I initially intended to imitate the QQQ trading method while applying it to the triple-leveraged ETF's I follow. As I paid closer and closer attention to my trades and the market fluctuations, I naturally gravitated toward getting in and out of trades far faster than a long term trader would. For whatever reason, trading ETF's on a very short timeframe has worked for me. In fact, the ETF's I trade are not meant for long-term trading anyway.

Another benefit of trading ETF's is that there is inherently less risk in them as opposed to individual stocks. Part of this is due to ETF's containing "baskets" of stocks, so if one goes down, it's not necessarily true that all the stocks in that basket will follow suit. Additionally, individual stocks have to report earnings on a regular basis. It's generally a good idea to not be in a trade when a stock is reporting earnings, as a bad report can often spell doom for a stock. ETF's do not report earnings, but the stocks within them do. This can help lessen the blow when one stock in an ETF reports back earnings, as the bad report is sort of diluted by the other stocks existing in the same basket.

Why do you sometimes own an ETF and its inverse at the same time?

Before I'd ever done this, I wondered if it was a dumb idea to own an ETF as well as its inverse. (For example, I could buy TQQQ, which is a three-times leveraged ETF representing the NASDAQ 100, and also buy SQQQ, which is the opposite of TQQQ - it goes up when the NASDAQ 100 goes down.) Then I tried it and decided I liked it. I had done it because I had entered a trade that turned against me, and I figured I'd hold out until the trade turned around. At the same time, I figured, "Well, since this trade is going against me, I might as well try buying its inverse, since that one should be going up." Once I owned both directions, it simply became a matter of timing to know when to sell either one.

I ran into this situation with what was perhaps my worst trade to this point: I bought SOXL while semiconductors were getting crushed for a little while. Rather than take a huge loss (over six figures... Yuck!), I decided to buy SOXS to help offset the losses. It actually worked out well, as I managed to make huge gains in SOXS while awaiting the inevitable SOXL comeback. I eventually sold SOXL for something like a $17,000 loss, but that was far better than a $100,000+ loss! Had I been more patient and held onto SOXL a few days/weeks more, I'd have turned it into a profit. Live and learn. Every trade is a lesson!

It appears that, when you trade, you buy the entire amount for your trade at once, and then sell all at once too. Why is that?

That's true - I generally do not "scale into" or "scale out of" the majority of my trades. Most of the time, I don't expect trades to last too long, so I sort of get in, get out, and go on my merry way. Usually when I do try to add to a position, I find that I don't get nearly as big a return on the amount I added as I do on the initial buy, so I tend to skip it. I also like to try to keep my trading super simple, and buying the full position all at once and then exiting the full position helps with that simplicity.

I should note that all the trades on this site will look like individual trades, even if I am adding to an already-open position. (Adding to an open position can essentially be thought of as a brand new trade anyway.) I just figured it'd be simplest to represent every trade on this site as an individual trade.

How do you limit risk?

My risk management strategy is probably contrarian to how most people would manage risk. I actually prefer to put on large trades because it forces me to pay closer attention than I might for a smaller trade. And once in a large trade, I watch that trade very closely. I'm fortunate in that I can be in front of a computer during most of the trading day, so I have the luxury of moving in and out of trades very quickly. So, in a nutshell, speed and attention are my main risk management tools.

Why don't you show profit targets and stop losses for all trades?

I typically do not set profit targets nor stop losses for the vast majority of my trades. There are times I'll exit a trade prematurely just because I've noticed something about the trade I didn't like. I've also exited trades at times simply because I wanted to free up cash for a better looking trade. As for stop losses, because I am of the opinion the ETF's I trade are generally more forgiving than individual stocks, where the ETF's will, more often than not, turn around and become profitable eventually, I sometimes decide to just wait out what starts out as a loss and see if it might turn around. My decisions on such things often are determined by chart action. If I'm in a losing ETF trade, but the chart appears to be behaving in a constructive manner, I'll stay in the trade. However, if an ETF suddenly acts erratic and plummets out of nowhere, I prefer to exit the trade, no questions asked.

Why don't you use automatic stop losses?

I have nothing against mental stop losses, but I'm very much against automatic ones. It's all too easy for "stop loss hunting" to occur. When you enter a stop loss in a trading platform, that information becomes visible to algorithms. Those algorithms can simply drop the price of an issue below your stop loss, even just for a second, and suddenly you're out of what may have otherwise turned out to be a profitable trade. The only time I'd suggest using an automatic stop loss is of you know you won't be able to keep an eye on a trade for a while, and it could be something of a security blanket. In today's day and age though, if you have a phone, you probably can track your active trades.

I heard you retired from your corporate job to do this full time, but your gains look pretty small overall. How is this possible?

It's all about money management and the willingness to put a lot of money on the line, even for a small percentage gain. After all, as little as 2% gain on a large chunk of change can yield some great returns. Of course, this methodology is not for everyone. Since I can watch the market closely when I'm in large trades, I feel more comfortable making such trades. Repeat the process enough, and you'd be amazed at how much your returns can compound.

What stocks/ETF's are on your watch list?

Here's what I watch the most, basically ordered from most attention to least:

• TQQQ: ProShares 3X Daily Bullish NASDAQ 100 ETF
• SQQQ: ProShares 3X Daily Bearish NASDAQ 100 ETF
• SPXL: Direxion 3X Daily Bullish S&P 500 ETF
• SPXU: Direxion 3X Daily Bearish S&P 500 ETF
• TNA: Direxion 3X Daily Bullish Small Cap ETF
• TZA: Direxion 3X Daily Bearish Small Cap ETF
• SOXL: Direxion 3X Bullish Semiconductor ETF
• SOXS: Direxion 3X Daily Bearish Semiconductor ETF
• LABU: Direxion 3X Bullish S&P Biotech ETF
• LABD: Direxion 3X Bearish S&P Biotech ETF
• BOIL: ProShares 2X Daily Bullish Natural Gas ETF
• KOLD: ProShares 2X Daily Bearish Natural Gas ETF
• ERX: Direxion 2X Daily Bullish Energy ETF
• ERY: Direxion 2X Daily Bearish Energy ETF
• TMF: Direxion 3X Bullish 20+ Year Treasury ETF
• TECL: Direxion 3X Daily Bullish Technology ETF
• TECS: Direxion 3X Daily Bearish Technology ETF
• FNGU: MicroSectors 3X Daily Bullish FANG Innovation ETF
• FNGD: MicroSectors 3X Daily Bearish FANG Innovation ETF
• FAS: Direxion 3X Daily Bullish Financial ETF
• FAZ: Direxion 3X Daily Bearish Financial ETF
• YINN: Direxion 3X Daily Bullish China 50 ETF
• YANG: Direxion 3X Daily Bearish China 50 ETF
• GUSH: Direxion 2X Daily Bullish Oil ETF
• DRIP: Direxion 2X Daily Bearish Oil ETF

What charting applications(s) do you use?

I use Fidelity Active Trader Pro as well as TradeStation. I only use OHLC (open, high, low, close) charts and don't use candlestick charts. I also avoid line charts, which seem essentially useless for my style of trading. I watch one-minute, five-minute, daily, weekly, and monthly chart intervals (but mainly focus on daily and five-minute charts).

What technical indicators do you use on your charts?

Anyone who has spent any time studying charts probably knows there are an overwhelming number of indicators out there. I ignore the vast majority of them because I like to keep things super simple. I use 20, 50, and 200-interval moving averages on all my charts. I also display volume per interval coupled with the 20-interval average volume. I have these indicators on all my charts at all times.

In addition to the above, when I become more interested in a potential trade, I will frequently add my own horizontal support and/or resistance lines to daily and five-minute charts, as well as trendlines where I believe they're appropriate.

How do you know where to put support and resistance lines on your charts?

Like virtually anything else when it comes to trading, this is more an art than a science. Since I operate on such short time frames, I like to do the following:

1. For whichever chart I'm viewing, look at its most recent (rightmost) bar.
2. For resistance, draw a horizontal line from the top of that bar to the left. For support, draw a horizontal line from the bottom of that bar to the left.
3. For resistance, move the resistance line you drew in step 2 up so that it touches as many bar highs, lows, and closes as possible just above the current day's bar. For support, move the support line you drew in step two down in the same manner. The more points that touch your line, the stronger the support/resistance.
4. This is entirely optional, but I've gotten in the habit of slightly adjusting my support and resistance lines such that their price points are at round values (whole dollar amounts, like $18, or decimals divisible by 5 or 10, such as $23.25, $57.50, etc.).

It seems that you sometimes go against the some of the advice you list here. Why?

Mainly, it's because trading, for me, as explained above, is much more an art than a science. I base much of what I do on "feel" coupled with whatever knowledge I have obtained related to the trade. I do try to follow my principles, but I am not robotic about it - there's always room for the human element.

What are some resources you might suggest to help me learn how to trade?

Countless websites, books, audiobooks, seminars, etc. exist to help people learn how to succeed in the stock market. Here are a few things I've found helpful:

Investors.com

This is Investor's Business Daily's website. I don't use it anymore, but it did provide me a wealth of education back when I was learning how to read charts and understand chart patterns. Their "CANSLIM" method covers both fundamental and technical aspects of trading, but these days I strictly focus only on the technicals (chart-reading).

How to Make Money in Stocks

This is an investing book written by William J. O'Neil, who is the main man behind Investor's Business Daily. It provides a solid foundation for the basic principles of trading.

Chartpattern.com's Education Section

This site belongs to a guy named Dan Zanger, who took CANSLIM to new levels back during the Interet boom. I used to be a member of his site, and while it's not cheap, it is a really great tool for learning. The education page I linked above is free and describes several of the most common chart patterns. Definitely worth a read.

Reminiscences of a Stock Operator

This is perhaps the most popular book of all time about stock market trading. Written by Edwin Lefèvre (which I believe is a pen name for Jesse Livermore, a pioneer of day trading). I own the Audible audiobook, and have gone back to it a few times. It's quite old, but also rather entertaining.

Dividend Growth Investing

This is a blog created by someone I met years ago quite ironically. I was flying to Miami, FL for a swing trading seminar hosted by Dan Zanger from chartpattern.com. I happened to be reading a book about investing, when the gentleman sitting next to me on the plane noticed it and began talking to me about the stock market. That gentleman is Harold, a retired stock broker who strongly believes in investing in safe-dividend growing stocks. As I mentioned previously, my trading style isn't for everyone. It's also not the "be all, end all" - coupling my strategy with safe-dividend growth can be a great way to invest. Harold, given his high degree of experience, always offers insightful wisdom into the overall goings on of the market. And quite frankly, I've never seen anyone accurately call market bottoms (often to the very day!!) as well as Harold has. His blog is definitely worth a follow.

The Single Best Investment

This book, by Lowell Miller, is essentially the basis for Harold's Dividend Growth Investing blog (see the question and answer just above this one). While dividend investing is not why my site is about, it's absolutely a great way to invest for the long term. Also, the younger you are, the better the time to start. If you have kids, this could be a nice, mostly hands-off approach to building a sizable account for their future.

Twitter Pages for Dan Zanger, Randy Opper, and Ryan Pierpont

I mentioned Dan Zanger's Chart Pattern website above. He's credited with having returns of greater than 14,000% (you read that right) swing trading stocks during the internet boom. Randy Opper is Dan's protégé and often provides useful overall market tweets. Ryan Pierpont is a US Investing Championship top performer, and also a friend of Zanger and Opper. Like Randy, Ryan often posts useful tweets about the overall market in addition to charts for stocks he's watching.

What's with the background images on your site?

I originally thought, "Since the stock market is located on Wall Street in New York, it'd be cool to display different New York City skyline images." I'm fairly certain all the "Cityscapes" images are of New York (at least I hope they are). As time went on, I decided to add the option to display "Financial" images, "Paradise" images, or a static background with no imagery. Scroll to the bottom of any page, and there are options to choose whichever background types you prefer. On modern browsers, the background image will fade from one to another every minute or so when anything other than "None" is selected.