Secrets of Winning Day Traders

2011 Dr. Max Vogt and DayTrading Team

http://www.DayTradingReport.com

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granted by DayTradingReport.com. If you got this report through

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Our disclaimer for this work and all materials, information and tips
connected to or generated by DayTradingReport.com can be
found at http://www.DayTradingReport.com/disclaimer
In brief, that disclaimer states that we make no recommendations
and do not give trading advice. This work is for entertainment and
education purposes only. ALWAYS consult a professional if you have
any questions about a trade or financial decision, and even then,
realize that a final decision is inevitably yours and yours alone. For
more details go to the disclaimer page cited above.
Acknowledgements:
Im grateful to the DayTradingReport.com team that assisted
regarding this Report. Its the fruit of lots of conversations and not a
few arguments.
Yes, Marcie, I know sometimes the way things are
stated here sound rude, but its only for your own good so you can
succeed at day trading. Day Trading is not like anything else, and
most people have to be shaken into that awareness until they finally
get it.

The Holy Grail of Trading

If you ever find a trading system that wins 100% of the time, dont tell
me about it, because Ill know youre either brand new to trading or
off your wheels. If you believe a system or method can win 100% of
the time, maybe you can also tell me about the little green men who
landed on your rooftop last night.
But as you probably know there are marketers online who either
claim outrageous winning percentages - which by the way is not the
correct way to judge whether a trading method is good, even
though the common-minded person might think it is.
Or they claim to generate vast amounts of money for you without
your lifting a finger except to put in your secret code to collect
money out of your ATM.
Listen. If such systems actually existed and actually worked, I
wouldnt be sitting here taking the trouble to help you understand
the way trading REALLY works and how you can be successful.
There wouldnt be any need to do so.
And even if such a system did exist or even a system which won
98% or even 95% of the time, sooner or later they wouldnt, because
markets are ALWAYS made up of only 3 categories of opinions
those participants who think the market is going up, those who think
its going down and those who think its going to stay put.
If there WERE a system that won 98% of the time, thered be no one
to trade against because no one would take the losing side.

That may sound all philosophical etc, but it IS something you need to
know about the markets that almost no one seems to understand.
Markets seem like these big institutions that live in expensive
buildings, but dont be fooled. Its just a bunch of people who have
opinions and believe enough in them that they are willing to put their
money (or someone elses) down on the table.
Winning day traders or heck ALL day traders who have been at this
game a while know that such magical systems dont exist or
better said, something might work 100% of the time for a little while,
but like throwing dice that keep coming up 7 sooner or later things
will change.
Winning day traders share certain traits, certain beliefs and
commitments. Even though they may trade different systems or
methods or time frames (one might trade 1 minute charts and
another may trade 60 minute or 550 Tick charts or anything else),
they still have certain premises they operate out of.
In other words, every successful day trader understands some
fundamental truths about the markets and trading and ACTS on
those beliefs and understandings.
The thoughts, practices, beliefs and ideas of numerous winning day
traders have been researched here and their recommended tips,
rules and tricks have been compiled and edited for you, along with
some of our own suggestions and ideas.
You can use this book to refer back to again and again.
I want to make a simple point here which I will repeat and you will
hear me repeat through all the works of this series and that our team
repeats over and over again on daytradingreport.com (well never
stop repeating this!).

Novices or newbies look for systems or methods.

Professionals look to refine their executions of usually very
simple methods and look to improve their mental game.
The above is a fundamental reality that separates the amateurs
who are always seeing the Holy Grail of Trading from the pros, who
are always seeking to refine their skills and refine their execution of
existing and usually very simple systems.

What youll find here may seem very simple TREAT it

as simple a simple route to success as a trader
The whole idea is to be brief. If every one of these puzzle pieces fro
successful traders were to be explored, this would be a 300 page
book, and I guarantee you wouldnt read it.
By carving it down and making it very short, I figure I have a chance
of your making it through this little work at least once I recommend
you read through it completely and thoroughly at least once a
week. Thats part of why I made it so short.
The way to remember to review this book is to save it to your
desktop.
You notice I named it WinnerSecrets. Maybe if you see that on your
desktop youll remember to read it.

Now heres what to do

You will be best served by first basing your own trading on the
foundation of those who have preceded you and broken the
ground on their own blood, sweat and tears.

If you actually start there (almost no one ever does), youll be miles
ahead of others and arrive at the winners circle faster than by any
other means.
There are lots of distractions youll encounter.
You will undoubtedly make discoveries applicable to your own
trading beyond what is presented here if you persist with a
dedicated and focused mindset, faith and purpose, but you can
save yourself a massive amount of time if youll spend a few hours
reading and re-reading this little book.

Why Traders Fail

Very few traders become successful.
The vast majority of traders fail and many of them completely lose
their account and even more, some lose their entire life savings.
Cynically speaking, the amount estimated to fail depends usually on
how aggressively the author is trying to promote his course or
software.
But whatever the exact figure of those who fail, its clear that most
do. And there are specific reasons this happens. In this series of
reports on Winning Day Traders, all of the reasons for their failures
and the cures for that failure are covered.
Still, many traders are earning more than one million dollars through
trading. Just sitting at their houses or on vacation as long as they
have a computer and an internet connection. I personally know
traders who have this kind of success.
Each trader has to decide on his or her goals for trading. Many
traders are happy just to make a nice hassle-free income or even to
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supplement their income, but dont want to spend a large amount

of time each day on the computer.
Some want to make a full time income and others have a drive to
get very rich through trading. All these are possible, but you need to
realize that the loftier your goals, the more time, energy, focus and
financial exposure you will need to take on.
Regardless of your goals though, the same requirements of mindset,
money management skills and knowledge apply, just on different
scales.
What follows are some of the core secrets shared by all successful
Day Traders, culled from interviews, books, programs and personal
conversations I have had with some of the best day traders.
A lot of the rules that are followed by these traders are familiar to
anyone who is trading. However, few of them are different from the
common beliefs of traders.
One famous trader said: The most important factor is not what
system or method you use, but your discipline.
We completely agree with this statement and will focus more on that
in the reports The Winning Day Traders Mind, and The Winning Day
Traders Plan.

These Are the Commandments. I wrote these calling them

commandments but of course thats meant ironically. The only
true Commandments were the ones given by God to Moses. But
these are important too if you wish to be successful as a day trader.
So I hope youll forgive the presumption, but I wanted to impress on
you how important these are.

Commandment # 1:
Thou Shalt Know Thyself
In the report Traders Mind Ill go into this in a much more detailed
way, but the core is this:
1. You need a good attention span for day trading. You need to
know what kind of attention span you have and are capable
of. Most types of day trading require extreme focus, but not all
require that focus to go on for many hours or all day.
2. You need to understand your risk personality. Are you very risk
averse or the opposite? Understanding your personality is very
important for determining exactly what kind of day trading
youre going to undertake.
3. You need to make sure you are clear headed while you trade.
4. You need to have impulse and emotional control. If you are an
impulsive, impetuous person (known in the industry as a
cowboy), go do something else. Being a cowboy will only
get you shot down by a better gunslinger.
5. You need to be a person who can follow a plan with discipline
(or who can learn how to do so). If youve never been able to
follow a diet, learn a skill or consistently perform at something
you may not be suited to day trading.
The market can look very exciting.
There is clearly a lot of money changing hands every day.
In order to be a successful day trader you need to be able to feel
that excitement and get energized by it, while at the same time not
succumbing to temptation or driven by emotion.

This is part of the real difference of trading versus other fields of

endeavor.
If you dont have the ability to stand aside watching the market until
your preferred trades or trade setups occur, youll never succeed at
trading.
If you DO have that kind of hard-nosed attitude and the ability to be
patient, calm and focused even while your heart is racing and your
mind is tempted to go crazy, you will be miles above and beyond
your competition and well on the way to winning.

Commandment #2
Thou Shalt Be a Master at Bailing Out
Just admit and liquidate your position when the market is moving
against you. Being wrong is one of the best ways of being right
that is, of winning!
If a trade is going against you and your trading plan, get out.
If a trade is going against you and your trading plan, get out.
If a trade is going against you and your trading plan, get out.
Now if you dont have a clear trading plan, be sure to check out
another report of mine called The Winning Day Traders Plan.
You have to have a plan.
And once that plan is clear and in place, follow it.
When a trade is going against you and your trading plan, get out.
In the years Ive been trading and talking with or guiding other
traders, the biggest mistake Ive seen traders make is not getting out
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when their stops are violated. This is where youll lose more money
than any other place, all things being even (and excluding nuclear
attacks, meteors hitting the planet, etc.)
Assuming you have established an exact stop in your trade (which
might be assuming too much since many traders dont even know
what they are), you must always honor it.
Its not winning percentages that create winning traders.
Many successful traders have winning percentages of less than 50%.
Some as low as 30%, and one trader I know made a staggering
amount of gains (in the 1,000%s of profits) being right only 1 out of 10
times (yes, thats right, he lost 90% of the time).
How?
Money management.
Cutting losers short and letting winners run.
Winning traders say that most common failure of the new comers is
that they are always unable to admit that they are wrong.
This makes them to hang on the losses incurred living in the hope
that market will turn in their favor.
Learn and live by this commandment.

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Commandment # 3
Love Thy Losses
This Commandment is an extension of #2.
Losses are and absolute certainty in trading.
Youre going to be wrong sometimes.
Losses are part of the business, but theres an even better way to
think of them:
When you take losses, it means you are IN THE GAME.
The only way you can win the game is by being IN IT.
Losses should make you smile.
You are up to bat.
A great professional baseball batter might get a hit 1 out of every 3
times at bat and be a league leader.
Its part of the game.
There are great pitchers out there (the market itself) and your job is
to take your best, most informed, most disciplined swings.
Hits are good, and misses also are good, if youre doing your best.

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Commandment # 4:
Thou Shalt Not Trade Thy Daily Bread
Usually this is stated, never trade money you cant afford to lose.
No one pays attention to that statement. Every new trader thinks
they wont lose so why would they pay attention to that warning?
LOL.
Further, no one even knows what it means, so let me clarify this and
bring it home. And I mean literally HOME, because if you dont know
it, you could literally lose your home, your car, your business and your
entire life savings by making a really bad trading decision.
Dont think it cant happen.
When I was doing some combat training we were told the following:
If the other guy pulls out a knife, you ARE going to get cut. Just
know that and assume it. Its critical you dont get surprised by that,
or you will lose your focus and end up dead.
Now you ARE going to get cut by the market, because it always has
its knife out.
You ARE going to lose money at some point and have a big
drawdown, if not today, then tomorrow.
If youre mentally and financially ready for this, it will be a cut that
will heal and make you stronger.
If youre not ready, it can destroy your whole life.
Now THAT is why the statement, only trade with money you can
afford to lose.

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If youre not already trading for a living and making a good

living, you are NOT prepared to make your daily bread from
trading.
Keep your day job and trade before you go to work or some
other time. But dont depend on making a living from trading.
Dont expect to support your family on trading if you havent
already proved that you can.
Work your way up. Start with demo trades, then trade tiny.
Make a very small goal, say $100 a month and work your way
up from there. In case you dont think making an extra $100 a
month from trading will make you feel good and allow you to
see your progress, you have no pulse.
You need mental freedom to trade successfully. If you are trading
your daily bread money you need to live on you can never
trade in what Mark Douglas calls a relaxed state of mind, which is
necessary for trading well.
Trading is challenging enough without outside influencing factors
coming in to influence your decisions, such as paying your rent or
buying groceries!
Never trade with scared money.

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Commandment # 5
Thou Shalt Preserve Capital Above All Other Commandments
The only way you can trade is if you have capital in your account.
Start with the premise of keeping your capital, by following the
preceding commandments, and you will be able to stay in the
game a long time.
Be prepared to reduce your positions if needed.
Keep at least 3 times as much capital in your account as is required
by the trade youre considering.
If you have too much at stake in any trade, youll be back to trading
scared money as we just talked about.

Commandment # 6
Thou Shalt Only Count Hatched Chickens, Not Chickens in the Egg
Nor Chickens Perceived or Imagined
In trading, hope is not a strategy.
Well, better said, it is a strategy for getting run over by the market.
Its fine to wait and let profits run, but not to the point where you
think brand new chickens are going to hatch out of the trade.
When you reach areas that offer support or resistance or other
indicators of possible market reversals, consider taking off positions or
taking yourself out of the trade.
Its only the chickens that are hatched that show up in your account.
Keep imagination and hope out of your trading as much as you can.

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The market is no place to get creative or think youve discovered

Nirvana.
The great traders I know take lots of profits as well as lots of losses. At
the end of the day they have more profits than losses. This is what
makes them end up profitable.

Commandment # 7
Thou Shalt Stick To Thy Plan
Dont change your opinions during trading sessions
Once youve established your trading style and trading plan (see the
report The Winning Day Traders Plan), stick to it and dont get
teased off of it by conditions, thinking maybe this is different.
Every day in the market is unique, just like every snowflake is unique.
However, in the end, when a foot of snow drops on your property, it
looks pretty much just exactly like the last time a foot of snow
dropped on your property.
Markets are markets are markets.
And although you cant know at any given moment where the
market is headed next, you can deduce a reasonable probability
(based on research) that the market is more LIKELY to move in a
certain direction with a certain velocity based on your trading
system.
All you have going for you is your consistency in executing your
trading plan.

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If you dont follow your trading plan you might win this time but over
time youre going to start hallucinating and thinking youll win by
breaking your rules consistently.
You wont.
Youll end up losing over time and blowing out your account.
Trade the same system, the same way, every single day.
This is how the casinos make all their money, and if you are a trader,
its how youll make all yours.
Its not all that sexy in the end (I have never thought trading was
sexy), but the toys you will ultimately be able to buy if you are a very
good trader ARE sexy.

Commandment # 8
Thou Shalt Start Small and Slowly Edge Up
Start with 1 (like 1 futures contract, 1 mini Forex or mini Dow, 100
shares of stock, whatever the equivalent of 1 is in what you trade).
Take your time learning 1. Months or even years if you wish.
Then, when you get really really really good results trading 1, trade 2.
Spend even more time getting good with 2. Learn the ropes of 2,
which is 100% bigger than 1.
You can do more with 2 than with 1.
For example, you can take 1 contract off with a small profit and let
the other go to see if it goes further.

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Once you have really mastered 2, you can go beyond that if you
like, because the same principle applies but you can make it as
complex as you like.
Let me just throw this in.
I know plenty of traders in futures who only trade 2 contracts and
make a very good living with very little exposure or risk in the market.
But hey its up to you however big you want to get.

Commandment # 9
Thou Shalt Honor the Blessed Break and Holiday
Every trading day fully engaged in takes something out of you. It
blunts your brain. It slows your reflexes.
You need to restore your body, mind and soul.
I dont care how tough you are.
Top professional boxers may only have 2 matches a year.
The best bodybuilders and weightlifters in the world know the secret.
Its the rest that makes your muscles get bigger and more defined.
If you are totally focused in your trading as you should be, you need
to take restorative breaks.
Lets say you are at 100% focus and efficiency and you are
averaging $1,000 a day trading at top form (of course there are
many making a lot more and many others making a lot less per day,
but this makes for easier math).
This is where it gets important.
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If your efficiency drops to 90% in trading, youre not likely to lose 10%
of your potential results, you are likely to lose 40 90% of your results.
Top traders know that when they are only 90% there or less, they
will do much worse or even drop to break even or start losing.
If you are trading and not 100% present and focused, do not trade.
Take a day or a week off.
Come back refreshed. Your results will show it.

A break lets you stand aside from the markets, get a fresh look and
new enthusiasm.
When trading every day you will tend to lose your perspective and
get too close to your work.
Take breaks.

Commandment # 10
Thou Shalt Think For Thyself (and Not Think As the Herd Does) Thou
Shalt Ignore Thy Neighbors Trading Opinions

The only thing Im going to say here, is that if you follow the analysis
of others, you will get the results of others.
Now go do some serious, in-depth due diligence on how those
others are doing in their trading and investing.
They are almost ALL losing money.
If you want to be like them, you will lose money too.
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Even the ones who say they are winning are cherry picking their
trades.
The dirty little lies and secrets in the trading industry is that only a few
people actually make money.
They may or may not tell others about it.
Just be very careful and get proof of product before you try out
trading methods, signals or indicators.

Commandment # 11
Thou Shalt Take the Trade Where It Occurs, Not As an After Thought
(Nor a Pre-Thought)
You know now to have a trading plan.
When you have that plan, the whole purpose is to follow it.
This might sound stupid, but take the trades that set up.
Time after time observing other traders, I see the trade they told me
they were waiting for set up and they were still sitting there.
Waiting for?
Christmas?
A do over?

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Commandment # 12
Thou Shalt Trade When the Market Is Active In Order to Avoid
Hallucinations
Its extremely important to have some way of measuring market
activity and activity.
On one of the futures we trade I use this simple idea. We trade an
oscillating that is moving UP and DOWN on broad ranges
patterns, so we must have a market thats going well up and
down
If the market range during our primary ours is X number of points, we
call it an active market.
If its less than that we tend to avoid it.
The only thing you can trade is activity.
However you go about defining it (there are many methods), only
trade during active market periods and not during inactive market
periods.

Commandment # 13
Thou Shalt Focus On One Market or Only a Few and Ignore the
Diversification Fallacy
Many of us have been told for our whole lives that the key to
successful investment is diversification.
This follows the concept never put all your eggs in one basket.

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However, markets are not eggs, and if you diversify its much more
likely to confuse rather than help you.
We recommend trading (at least when you are starting out) only
ONE market.
Learn it intimately how it moves, its ranges, its most volatile periods;
in sum, its personality.
This puts you in good shape to trade that market.
We recommend this because different markets move in different
ways. Its like having a friend you know very well.
You can relate better if you understand someone.
Markets being nothing but a mass of human psychology are
driven by human emotions and tend to have a personality. Learn it
and work with it.

Commandment # 14
Thou Shalt Avoid The Headache of Indecision.
If youre not sure whether to get into a market or not, sit on your
hands.
Dont trade anything EVER unless you have a strong and clear view
on the market at that point and whether price is meeting the
requirements of your trading plan.

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Commandment # 23
Thou Shalt Allow Thy Profits to Run... IF
This commandment is best followed when you are trading 2 or more
units (contracts, positions, hundreds of shares, etc).
Its very good to take profits on part of your lots or positions, and then
let the others have a chance to take off further.
Sometimes they will run.
Weve found that theres a higher probability than not youll end up
closing the other contracts pretty close to where you closed the first
one, but there are those days which actually frequently account
for the reasons many weeks are big winning periods where you can
get a big home runs.

Commandment # 24
Thou Shalt Have Patience, But Not Too Much
A lot is made of having patience in trading and waiting for the
proper setups to truly develop.
Thats good but the other side of the commandment is true too.
If you have too much patience and require too much confirmation,
more than likely the trade will already be gone by the time you can
enter.
And if you have too much patience on exiting a trade, youre likely
to find that the market will retrace and youll be exiting way off the
tops or bottoms.

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All in all, its a matter of your TRADING PLAN which we discuss in

another one of these reports.
Youll receive all there of the Reports over the next few weeks as a
subscriber to the newsletter.

Commandment #25
Thou Shalt Be Grateful
This is the most important commandment of all, and I can write this
one with no sense of irony, since it will actually if practiced
thoroughly and sincerely turn your consciousness toward the
source of all good things, that is, God.
Above all other things, the most important thing for you to practice is
GRATITUDE.
Gratitude for the opportunity to be able to trade the markets.
Gratitude for your wisdom to learn about this wonderful opportunity
of trading.
Gratitude for your intelligence, thoughtfulness and freedom to do
something which can help you along so much in life.
Gratitude for everything and everyone who has brought you to this
place and who will help you along the way.
And gratitude for so many other good things given and offered to
you every single day.
You are one of the luckiest people who have ever lived in the history
of the world.
And gratitude will serve you fully in your life.

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I do recommend that each day you write down 5 things you are
grateful for.
This will bring you closer to your spiritual self.
It will help you realize how lucky you are.
It will help you become a better trader.
And it will help you be a better person in every area of your life.

Good trading to you now and in the future

Dr. Max Vogt
http://www.DayTradingReport.com
info@daytradingreport.com

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