Whilst Bottom Picker has closed the coffee shop in Nelson Bay and gone on holiday, we asked him to put down on paper some of his insights on daytrading.

Anyone can become a day trader, and I mean anyone.

This doesn’t mean that they are all very good at it but the lower bars to entry have made the concept available, like never before.

This has led to increased daily share price volatility, also like we have never seen before.

Back in the days of the stock market floor, I would witness blue chips moving in a range of 20c a day. Now with screen trading, CBA can move over $3.00 some days.

With brokerage rates low at $5 a trade, if you traded in 100 CBA shares your potential P/L swing could be +/- $300 and your cost would be just $10 to be in the game. $5.00 in and $5.00 out.

If you traded in 1000 CBA shares your potential P/L swing shifts to +/- $3000 and your cost shifts to ~$20 in and $20 out.

Exciting stuff indeed.

Ease up, turbo

So your eyes light up at the potential money-making opportunity… and the potential chance to actually lose money kind of fades towards the back of your mind.

Every ‘new to it’ daytrader gets dazzled by the lights and the opportunity.

I mean if everyone can do it, how hard can it be to make money?

Originally, I wanted Confessions of a Day Trader called the Tortoise and the Hare but they thought it more fun to call me Bottom Picker (Ed: It is funny, though), as every day I try and pick something at the bottom of the market.

What I was meaning was that by slow steady trading, concentrating on just a few blue chips, would over time beat all the pumpers and dumpers.

Grandad trading vs WRX baseball cap backwards trading, if you get my drift.

So, where should you start?

Grab a notebook and write down ‘Objectives’ as a heading and then put down on paper what your objectives are and how these objectives will ultimately lead to your desired outcome.

Don’t do it on a screen, do it on paper.

This way you are transferring your thoughts and converting them into words.

Is your objective to make money? Buy a car? Or increase your savings? Or whatever – and then write down how much capital trading you have do to achieve those goals.

So, what do you want to achieve, how much do you have and what is your timeframe?

If you have, say $50,000 to punt with and want to make $10,000 in two weeks, then you are in the ‘WRX want it all now’ trading class.

If you say ‘I have $50,000 and my bank returns me $500 a year in interest and I would like it to increase it to a 10% return over the years’, then you are in the grandad class.


Next headline to write down is ‘The Right Tools’.

You are going to need a mobile phone, a laptop, internet connection at home and when away from home.

My phone is an Android C3Me phone which cost me $178 and a Google Notebook by Lenovo which cost me $500.

Internet connection is via ALDI mobile on a $45 a month family plan for two.

Then you are going to need a good trading platform.

You need one that gives you a live data feed, holds your funds in a separate (to them) cash management account and your own HIN, so you retain ownership over those shares.

In the early days I would use Commsec and pay $20 min commission in and out, just so I knew my money was safe.

I had a mate who traded soybean futures and he would spend hours looking at charts and even spent U$50,000 going to America to meet a super trader. His graphs went back to the 1800s and then one day he woke up and his broker had gone bust and all his trading funds were gone as well.

All his positions were automatically closed out, so he also had to cop those losses on top.

He was 90% there but the cheaper brokerage platform and their setup had got him.


Next headline to write down is ‘Commitment’.

How much time and effort are you prepared to put in to achieve your objective goal?

I have friends that trade the US market from Australia and US friends who trade the US market from America. They would never sit up all night trading Aussie stocks, so why should you?

Either move to America and be in their time zone or just trade Aussie shares in your own timezone.

Gagging To Win

Next headline (don’t leave this page open for all to see – ‘Going to War’ or GTW to be safe).

You’ve got your objectives, you’ve got your tool box and you are committed. Now you are about to enter the gladiator stadium.

It opens at 10am and closes at 4pm Sydney Time. That’s six hours according to my fingers.

The first half hour and the last half hour are pure gambling times, so that leaves you with five hours.

The trading sweet spot (I have found) is between 11am and 2.30pm, so we’re down to 3.5 hours out of 6.

As the sweet spot starts to appear and fade away, you can normally find a trend in a couple of stocks on your watchlist and also a few big fallers that may not be on it.

As I am a Grandad trader, I rarely stray away from the blue chips. That is because I want to preserve my capital and blue chips rarely get suspended or put into trading halts.

Remember, we arrive with cash and we go home with cash.

If you look at AVZ, they have gone from a trading halt to being suspended and everyone’s punting funds are tied up in their suspension. With a market cap of $2.75bn at 78c.

Recap: Objective, Right Tools, Commitment and GTW strategies.

Next week, it’s down to business. I will run through some GTW strategies, even when wounded a bit.

Bottom Picker.