Page 12 - Trading #101 Course – Part One: Trading Basics

TRADING #101 COURSE – PART ONE: TRADING BASICS /2017-10-06

Great Day Trading Markets

• S&P e-mini (ES) futures market
• S&P futures market
• NASDAQ e-mini (NQ) Futures market

These markets are liquid, competitive, fun, and fast and exhibit good intraday trends. I
also have enjoyed trading the NASDAQ QQQQ (formally known as the QQQ) and the
DIA (Dow Diamonds) indexes.

The futures markets are set up for speculating, and the stock markets are set up for
investing. Short-term traders are speculating. However, a valid argument is that there
are more opportunities in the stock market because there are more stocks than futures
markets.

You decide which markets are best for you. The e-mini markets are electronic, with fast
fills, which are great for day trading. Also, with an e-mini market you can buy more
contracts than the regular contract of that market, which can be advantageous,
especially when applying “scaling-out” techniques that require multiple contracts. In
addition, the e-mini markets can be traded with smaller trading accounts while still
operating within proper money management risk controls and trade size.

Using Stock Sectors and Groups to Better Your

Odds

This is for equity traders and stock option traders. There are two approaches you can
use to decide what stocks to trade. One is called a top-down approach, and the other is
called a down-up approach. Here are the differences:

1. Top-down approach:

• a. Sector
• b. Group
• c. Individual
In using this approach, you start the analysis at the sector level and work your way
downward to individual stocks. Traders using this approach first look at the stock sector
charts. Then they analyze the groups, and then pick the best individual stocks to trade,
thus the name “top-down approach.”

12 | P a g e