Stock Trading Playbook

Brokerage Accounts Under $25,000

1. If you plan on performing trades within the same market trading day (Day Trading) leverage at least 2 brokerage accounts and split trades between accounts. Save lower potential upside day trades for Robinhood as at an average $14 in commision per trade cycle (buy/sell) that needs to be factored in the potential upside from using a commision based brokerage account.
a. Robinhood (commission free)
b. E*Trade/AmeriTrade or similar
2. Never put more than 20% of your brokerage account value into any single stock. Things happen and worst case scenario you will limit your possible losses by a factor of 5.
3. Try to leverage limit buy and sells whenever possible. This means you only buy or sell at a specified price. Due to delays in market data response you might end up getting less for your dollar issuing market value trades.
4. Wait until 9:30 AM CST to initiate buys if possible on high volatility stocks that are not listed as short timing (day trade). The greatest price movements typically happen right after market open and you want to ensure that there is an upward movement trend versus a downward trend. If the trend is down then buy at a price below the recommended trigger price.
5. Wait until after market close 3:00 PM CST to setup your stop limit trade. This eliminates the possibility of getting flagged as a day trader. Once flagged as a day trader you will no longer be able to execute same market day trades for the same stock.
6. Always setup a stop limit trade after the price surpasses your purchase price by the percent that you are willing to lose and set the stop limit price to the same percentage. So if you are comfortable possibly losing 10% as the market does fluctuate then set your stop limit and limit price to 10% below your purchase price.
7. Determine a minimum level of upside your comfortable walking away with regardless if the potential upside is far higher. Once the price of the stock surpasses that level plus your loss cushion setup a stop limit trade for that value. This means you will typically walk away with a minimum of that value.
8. Consider buying only half of the total stock volume you want on the initial purchase. This gives you room to buy more if the price drops before it goes up, this happens often in the market and is known as a swing trade. This allows you to sell all of your stock at a lower level and still obtain the expected upside and minimizes potential losses. You can execute multiple buys for the same stock in 1 day without it counting towards day trading flags.

Brokerage Accounts Over $25,000

1. Never put more than 25% of your brokerage account value into any single stock. Things happen and worst case scenario you will limit your possible losses by a factor of 4.
2. Try to leverage limit buy and sells whenever possible. This means you only buy or sell at a specified price. Due to delays in market data response you might end up getting less for your dollar issuing market value trades.
3. Wait until after 9:30 AM CST to initiate buys if possible on high volatility stocks that are not listed as short timing (day trade). The greatest price movements typically happen right after market open and you want to ensure that there is an upward movement trend versus a downward trend. If the trend is down then buy at a price below the recommended trigger price.
4. Always set up a stop limit trade after the price surpasses your purchase price by the percent that you are willing to lose and set the stop limit price to the same percentage. So if you are comfortable possibly losing 10% as the market does fluctuate then set your stop limit and limit price to 10% below your purchase price.  Good rule of thumb is to use potential earnings and divide by 2 to determine loss percentage.
5. Determine a minimum level of upside your comfortable walking away with regardless if the potential upside is far higher. Once the price of the stock surpasses that level plus your loss cushion setup a stop limit trade for that value. This means you will typically walk away with a minimum of that value. Being a good trader is about minimizing losses and risk.
6. Consider buying only half of the total stock volume you want on the initial purchase. This gives you room to buy more if the price drops before it goes up, this happens often in the market and is known as a swing trade. This allows you to sell all of your stock at a lower level and still obtain the expected upside and minimizes potential losses.