How to Day Trade for a Living

Example of a Moving Average Trend Strategy on CELG.
Another example is EXAS on July 28, 2016 with 9 EMA.

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Example of a Moving Average Trend Strategy on EXAS.
To summarize my trading strategy for Moving Average Trend Trading:
1. When I am monitoring a stock and notice a trend is respecting moving average, I consider
trend trading. I quickly look at the previous days’ trading data to see if the stock is
responding to these moving averages in a 1-minute or 5-minute chart. I have 9 and 20
EMA and 50 and 200 SMA.
2. Once I learn which moving average is more suitable to the behavior of the trade, I buy the
stock after confirmation of moving averages as a support, and I buy as close as possible to
the moving average line (in order to have a small stop). My stop will usually be 5 cents
below the break of moving average line.
3. I ride the trend until the break of moving average.
4. I never use trailing stops and I constantly monitor the trend with my eyes.
5. If the stock is moving really high away from the moving average, I take some profit,
usually at half-position. I do not always wait until the break of moving average for my
exit.
I personally don’t trade very often based on moving averages. I look at them to see potential
levels of support or resistance, but I rarely make any trend trade based upon their trend because,
in a trend trade strategy, you are usually exposed in the market for a considerable time. Some
trend trades can last as long as several hours and that is too long for my personality.
Another major problem I have with Moving Average Trending is that you don’t know in the
stock you want to trade which moving average is accurately acting at a support or resistance
level. In the examples above, if I changed my moving average from 9 to 12, or to 15, or to any
other number, then it won’t act as a nice clean support.
I use 9 and 20 EMA on my default charts, but I know not everyone does. Some traders are using
11 and 21 EMA. That in the end is a significant problem with Moving Average Trading. You
don’t know which moving average is best for a stock and you obviously do not have enough
time to test them all out during the trading day.
I recommend using either:
9, 20 EMA and 50 and 200 SMA or:
11, 21 EMA and 50 and 200 SMA
Having said that, Moving Average Trend Strategy is an excellent strategy for beginners, because
it usually does not require a very fast decision making process and trade execution. In addition,
stop loss and entry points can be clearly recognized from the moving average on the charts.

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As I discussed, strategies depend on your account size, personality, psychology of trading and
risk tolerance, as well as on your software and the tools and brokers that you have. The
combination of all of these factors have led me to be a VWAP trader and support or resistance
trader, something I will explain in the next section. However, I want to emphasize that trade
strategies are not something that you can imitate just from reading a book, speaking with a
mentor, or attending a class. You have to slowly and methodically develop your preferred
method and then stick with it. There is nothing wrong with any strategy if it works for you.
There is no good and bad in any of these strategies; it truly is a matter of personal choice.
Now let me explain what my favorite trading strategies are.

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