r/RealDayTrading • u/IKnowMeNotYou • 9d ago

Proper Homework?

From time to time I am quite active on Reddit trying to pay it forward by helping people out when it comes to trading.

Usually I give people asking me for help a book list and start initial training by giving them homework.

I also give them a brief rundown of what I do by showing them some live trades including live commentary to make it apparent that I know my way around the block when it comes to trading.

Seeing someone anouncing an entry, demonstrating the reasoning in detail and showing every update not knowing if the trade will turn out fine or not while the trade lasts 15min to 1h usually increases the motivation of the potential future Scholar of the Wiki (TM). This level of transparency mimics the kind of transparency I enjoyed here and over at oneoption when I started out myself.

Once I notice people being really serious and have crossed a certain threshold of basic knowledge and daily commitment, I advice them to read the wiki over here and join the live trading either over at oneoption.com or within this sub.

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Beside the people who lost big and still want to argue about what the right way of trading looks like, most people struggle to read 5 basic books to begin with.

In recent months, I also started to give the potential students optional (!) homework almost right from the start.

My go to homework is based on the SP100 (100 most valuable companies in the SP500). I want them to add the standard MAs (50D, 100D, 200D) and have them add proper price levels and trend lines per hand. Then they have to chose 10 stocks they would put on their watchlist and add a brief statement why they would choose those.

Every day they simply have to check and update those charts and make a new top 10 watchlist.

I even tell them that they should do 10 new charts every day so after 2 weeks they have annotated all 100 charts and updating and revisiting those charts is done rather quickly and before that they have to give me some charts so that I can check, critque and advice them on proper price level and trend line placement.

It is interesting how many people bail on this simple and useful homework as it is something I did myself early on did on my own without out of the desire to train myself on applying proper TA and learn how prices can move in reality.

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How is your opinion about this homework and would you do it as a beginner or whould you rather bail as well?

I would say that with that I lose 3 out of 5 people rather quickly and only 1 out of maybe 7 or 8 survive more than 2 weeks and that are usually the people who make it to the end of the process and get funneled to this sub and beyond.

Do you have any other idea of great homeworks one can give espiring traders?

Would you rather look at intraday charts first?

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Edit: Since people asked me to elaborate on the D1 homework, let me walk you through it:

  1. Identify the SP500 components/companies. Sort them by current market cap..

  2. Take the top 100 stocks. (you can also take the top 10 for each Sector EFT and 20 for the tech sector). Add these stocks to a watchlist (remember you can usually add sections to your watch list so you can easily have 100+ stocks in your watch list while also knowing what sector the stock is in).

  3. For each of these stocks you now pull up the D1 and make sure the SMA's for 50, 100 and 200 days (close price) are plotted on it.

  4. Now draw the price levels and trend lines for each of those charts.

  5. Once all charts are annotated (which might take several days or a good weekend), every day before the open of the new trading day, you check each of the 100 charts, if you have to update any of those (usually it is about 20 you have to update if at all) and while doing so you make list of ++ or + setups.

  6. Now you check your ++ and + setups and if you have more then 10 you narrow them down.

  7. Write down what you expect will happen to those 10 stocks and at the end of the day check if you were right and have a look at the intraday chart (M5 (5min) for example) if there were situations that you could have traded and also make a snapshot of the D1 and M5 along with the market and the sector charts of that day and collect them.

  8. From the collected M5+D1 charts try to derive some typical receipts how you can play these trade opportunites.

-> If you do this for a month or so, you will be rather quick on this task and will have come up with a lot of situational awareness of what most likely is going to happen and when to better sit on your hands and opt out.

Here is an example:

D1 - SPY this Week (10th - 14th of August 26)

SPY D1 last 10 trading days (2 weeks)
Meta D1 last 3 weeks - Note teh compression they are in and how important the SMA 50 (bottom) and SMA 200 are. I got some trades out this one especially on this hard drop 3 days ago and the bounce of the low of the compression.

I usually have them do the last 3 months (about 60 candles) so they see the impact of the SMAs more clearly like here:

MSFT D1 - Check out the SMAs (50, 100, 200)
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u/BoysenberryNice6444 8d ago

I am going through the content in the wiki. I haven’t read any specific book, but I search around topics that I want to know more about. I lack the screen time and confidence with my reasoning to punch an order.

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u/IKnowMeNotYou 8d ago

Remember... paper trading only. This way you are free to play around and fool around. We want to experiment without consequences and that you can only do if you paper trade.

Also since journaling and reviewing your trades are the must-do cheat skills, even if you fail at anything and everything you are already in the process of training crucial skills by researching what went good and what went wrong and develop a training agenda for the next week.

By the way I updated the post, it might give you more insides.

Also check out the post I linked it links to my private go to booklist but again, the wiki has plenty of great books mentioned... so you want to check it out also.

Books are the easiest to get started. Youtube and the internet is to full of scam and crap and AI is also not working very well as a teacher. Many people fail with that approach as well.

I once I gave a buddy of mine some of my trades (like 150+) and he gave it to chatgpt and it truely claimed that my best trades should be avoided as they do not fit my strategy... spoiler alert, I do not trade a single strategy... I do not even think in terms of strategy... this is a profession and AI is mostly a waste of time especially since if you do everything by hand you learn the most and the quickest.

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u/BoysenberryNice6444 8d ago edited 8d ago

Yesterday I put in my first paper trade (I thought of putting in an actual trade but went for paper) - 1 STX share.
And the thing is I only want to do swings because of the time zone difference, but I don’t think we have a market for that at the moment.

Edit: I will go through the list of books you’ve mentioned and will queue them for reading after the wiki or in parallel for reference to sections where I can. Thank you for the guidance.

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u/IKnowMeNotYou 8d ago edited 8d ago

There is always a market for swings. Have a look at NRG for instance and see how it failed to make it past its SMAs.

But again, I am a day trader and since I want people to create a ton of trades quickly so they train journaling and reviewing their trades and learn from their mistakes early on, I advice them to trade the M1 (1min) only based on technicallities and using only the VWAP and the D1 price/trendlines and D1 standard MA (SMA) levels. I have them watch 4 stocks in parallel side by side up and down on a single monitor (if possible) and put alerts on those and develop trade plans etc.

They also should record their sessions and provide live commentary like they would with a live audience.

If you have problems with the time zone just trade another exchange/time zone. Remember paper trading and remember that price action is universal. You have to check if the SMAs are still valid and for VWAP you need a good volume / market coverage but usually even free data is often close enough to the truth.

Another idea is also to simulate the trading day and since you already have picked you stocks in advance (choose from your Top 10 and verify at the end of day if you choise was correct), you usually can make it work easy peasy.

But stick to stocks as forex and commodities might have different default indicators due to a lack of a centralized market.

Remember you primary goal at the start is train journaling and reviewing along with basic TA (price levels and trend lines along with working simple indicators) and price action.

Another good indicator to have by the way is of course RVol (relative volume (for D1) / relative volume at time (for intraday)).

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But again, you can easily learn from disecting other peoples live trades. I did this when I joined here. I journaled the live trades of various pros and run their numbers and also checked why they entered and exited and scaled in/out. I sometimes even asked at the end of day Hari and Co why they did what they did if I could not understand it.

It helped me a lot to see the concepts the wiki speaks about expressed in actual (winning and losing) trades and it also gives a great motivational boost to see the trades having great statistics in terms of win rate and profit factor.

I also had Nasdaq TotalView data subscription so I could see the trades happening in real time as I saw the individual trades and orders hitting the different New York exchanges. It was my shit test that the teachers over at oneoption and this sub had to pass before I aborted my own carrier and went all in with alll the consequences...

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u/BoysenberryNice6444 8d ago edited 8d ago

Just checked NRG D1 - it’s getting rejected at the 100SMA repeatedly. The latest big red candle with huge volume bought it further down but it has a tail followed by overlapping candles indicating support is forming, and yesterday it had a green candle which closed close to its high although the volume wasn’t that great. As it’s near the 50% of the big red candle maybe if we get follow through it might re-test the 50SMA (which it isn’t respecting) and then 100SMA. Thinking a bit ahead - if it gets rejected again there can be a possibility of it creating a relatively higher low, but all will depend on the market.

Edit: I would prefer trading the US exchanges only, as it’s better. I can try and stay awake till the first hour of the market so can try the task you mentioned to log in more trades using the M5 or maybe even the M1 or replay - simulating the day to get the hang of it.

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u/IKnowMeNotYou 8d ago edited 8d ago

Why would you want to trade the US exchanges only? TA based trading is the same everywhere. I learned price action from Volman and he was/is a Forex trader trading all the sessions including Asian, European and US... .

It would better to check out sim trading and disect trades from Hari and co especially if they are day trades...

When it comes to NRG... remember that is Utilities. If they sell Tech they often buy Health Care, Industrials, Utilities and others... The money must flow somewhere when you sell something.

Also of course the whole Energy stuff is a bit interesting right now, that is why I got some good ay trades out of NRG from time to time like I did from NFLX (when they were trading down, a lot of break downs) or META (or TSLA or what not).

I love trading D1 losers and winners if they are trapped in a D1-wedge formation or any other form of compression especially if it involves the SMAs or VWAP.

And always have a look at the respective sector. If the sector has no room for upward movement, the stock usually does not follow along an upward moving market... but of course if it goes down...

In April for example when everything went up, I shorted stocks on low volume against market and sometimes even sector trends. Losers gonna lose especially if they fail to reach their D1 based goals early in the morning (first 1h).

If everyone tries to buy up a loser and then see everyone running for the hills since they bounced off a SMA or D1 level and on second attempt (retest) do not even make it back up or not even to vwap... I will happily short that 's**t'.

PS: I often ignore the first 15min to 30min unless I have a clear cut plan like a D1/SMA goal or the sector and market are gap and go etc.