An excellent way to get into trading, especially if you have the passion but not the starting capital, is by working with proprietary trading firms, often called "prop firms." These companies front the trading capital for you. In return for a share of the profits, they provide the money, high-end tools, and often the mentorship needed to succeed.

Essentially, you don't need your own cash to get started. Once you prove you can trade consistently according to their criteria, a manager assigns you a certain amount of buying power. As your trading skills develop, that buying power grows with you.

In 2020, I founded Peak Capital Trading, a prop firm based in Vancouver. We were able to negotiate great commission rates and access to advanced platforms from our clearing firms. We start new traders with $100,000 in buying power and increase it as they show they can handle it. For instance, one of our junior traders demonstrated such skill that we bumped his buying power to $500,000 after his first month. Our profit-sharing model is also gradual; traders who make over $10,000 in a month keep 85% of their profits.

Thanks to technology, you don't need to be in a physical office anymore. Our traders are spread all over the globe, working from their own homes. If you're looking for firms with a long track record, SMB Capital, founded by my mentor Mike Bellafiore and his partner Steve Spencer, offers great training. Seven Points Capital is another well-known name in the industry.

If you’re serious about trading but short on funds, joining a prop firm is an avenue worth exploring and a solid step toward building a professional trading business.

Getting Your Tools in Order

Understanding your tools is a core part of the fundamentals of day trading. Many new traders confuse their trading platform with their broker, but they’re two different things. A trading platform is the software you use to place orders, which then sends those orders to your direct-access broker to be cleared at the Exchange.

Most brokers offer their own proprietary platforms, but the quality, speed, and features can vary dramatically. This also affects the cost. Many charge a monthly fee, but they might waive it if you generate enough in commissions. For example, Interactive Brokers offers its platform, Trader Workstation (TWS), but also lets you connect to others like DAS Trader. Lightspeed Trading has Lightspeed Trader, and TD Ameritrade is known for thinkorswim.

Here’s a quick breakdown of some popular US-based brokers:

• Interactive Brokers: Uses TWS or DAS Pro.
• Lightspeed: Uses Lightspeed Trader.
• TD Ameritrade: Uses thinkorswim (TOS).

Personally, I use Interactive Brokers (IB) as my broker and DAS Trader as my platform. While IB has its own software, TWS, I don't find it ideal for day trading. DAS Trader, on the other hand, is a Nasdaq Platinum Partner, which means it offers incredibly efficient execution. To be clear, DAS isn't a broker; it's a platform that I link to my IB account. When I place an order, DAS sends it out, and IB, my clearing firm, fills it. I pay commissions to IB and a monthly fee to DAS for the platform and data.

Speed is everything for a day trader. You need to get in and out of positions in seconds. If your setup doesn't support Hotkeys, you're at a serious disadvantage. I’ve seen stocks spike and been up a thousand dollars in an instant; you need to be able to lock in that profit immediately, not fumble with your mouse.

Why Real-Time Data is Non-Negotiable

Swing traders can get by with free end-of-day data because their trades last days or weeks. Day traders can't. We operate on a scale of minutes or even seconds, which means we need real-time, intraday data. This isn't free; you'll pay a monthly fee to your broker or platform for it. Since I trade primarily in the U.S. markets for their high volume and volatility, I need the Nasdaq TotalView Level 2 data feed. Without it, you simply can't trade properly.

Understanding Level 2 and the Bid-Ask Spread

For trading U.S. stocks, having Nasdaq Level 2 access is mandatory in my book. It gives you a look inside a stock's price action, showing you who is buying and selling and where the price might be headed next. It’s considered a "leading indicator" because it shows you the order book before trades happen, unlike charts and moving averages, which are "lagging indicators" that show you what has already occurred.

Level 2 is the order book for Nasdaq stocks. It shows you a ranked list of the best bid (what buyers are willing to pay) and ask (what sellers are demanding) prices from all the different market makers. The difference between the highest bid and the lowest ask is called the bid-ask spread. This spread can be as narrow as a penny on a quiet day or widen to several dollars during a sharp rally or drop.

The most important takeaway from Level 2 is understanding this spread. You’ll see that low-volume stocks generally have wider spreads, as the market makers controlling them demand higher fees to participate.

Keeping Your Charts Clean and Effective

When it comes to my charts, less is more. In day trading, you have to process information and make decisions in a split second, so I can't be tracking dozens of indicators. Here’s what’s on my screen:

• Price action (candlesticks)
• Volume
• Moving Averages: 9 EMA, 20 EMA, 50 SMA, 200 SMA
• Volume Weighted Average Price (VWAP)
• Previous day’s closing price
• Daily support and resistance levels (I draw these manually)

My DAS Trader Pro platform plots all of these automatically, except for the support and resistance levels, which I identify myself during my pre-market prep. I keep my moving averages gray, but my VWAP is blue because it’s the most important indicator for me and needs to stand out. A cluttered, colorful chart is just distracting and strains your eyes over time.

Order Types: Your Control Panel for Trading

You have three main order types for day trading: market, limit, and marketable limit orders.

• Market Orders: This is telling your broker, "Get me in or out at any price, right now!" The problem is "at any price." The market can move in the instant it takes to place the order, and you could get filled at a much worse price than you expected—this is called slippage. I strongly discourage using market orders.
• Limit Orders: This is telling your broker, "Buy me in at this price or lower," or "Sell me at this price or higher." It gives you price control, but there's no guarantee your order will get filled if the price moves away from your limit.
• Marketable Limit Orders: This is the most important order type for day traders. It’s a hybrid that says, "Get me in now, but not for more than this price." For example, I might place an order to buy at the "ask + 5 cents." This tells my broker to try and fill me at the current ask price, but it has permission to go up to 5 cents higher if the price moves quickly. This gives you the speed of a market order with the safety of a limit order. I use marketable limit orders for all of my trades.

Hotkeys: The Key to High-Speed Trading

Hotkeys are keyboard commands you program to send orders instantly. Professional traders don't use a mouse to enter and exit trades; they use Hotkeys for everything. This eliminates manual entry delays, which can be the difference between profit and loss, especially during the volatile market open. Mastering a few key combinations is one of the most crucial fundamentals of day trading.

For example, I have Hotkeys set up to:

• Buy Long: Buy 100, 200, or 400 shares with a marketable limit order of Ask + $0.05.
• Sell Long: Sell half or my full position with a marketable limit order of Bid - $0.05.
• Sell Short: Short 100, 200, or 400 shares at Bid - $0.05.
• Cover Short: Buy to cover half or my full position at Ask + $0.05.

I also have separate Hotkeys for when a stock is under a Short Sale Restriction (SSR), which is triggered when a stock drops 10% or more from the previous day's close. In that case, you can only short on the ask, not the bid.

It takes practice, and you will make mistakes. That's why trading in a simulator for a few months to master your Hotkeys is essential. And a quick pro-tip: always use a wired keyboard. A wireless one can lag, send repeat keystrokes, or die at the worst possible moment.

The Power of Community

Trading can be a lonely and emotionally draining job. It’s incredibly valuable to join a community where you can ask questions, learn from others, and share your own experiences. Online trading rooms are great for this. Some well-established educational communities include TheoTrade, Simplertrading.com, and SpikeTrade.com. For forums, Investors Underground and Warrior Trading are popular, as are Elite Trader and Trade2Win.

I personally trade in our chatroom at Bear Bull Traders. It’s an interactive environment where we all learn from each other. But it’s crucial to remember one thing: use the community for learning, not for blindly following. Successful traders are independent thinkers. Never follow the herd into a trade; use your own judgment to decide when to pull the trigger.

An Introduction to Candlesticks

To understand any strategy, you first need to understand price action, and the best way to visualize it is with candlestick charts. The concept has been around since 17th-century Japan, where it was used for trading rice.

To create a candlestick, you need four data points for a given period (e.g., one minute, five minutes, one day): the open, high, low, and close.

• The Body: The wide part of the candlestick shows the range between the open and close price.
• The Wicks (or Shadows): The thin lines extending from the body show the highest and lowest prices reached during that period.
• Color: A hollow or green candle means the price closed higher than it opened (buying pressure). A filled or red candle means the price closed lower than it opened (selling pressure).

Each candle tells a story about the battle between buyers and sellers. It’s a visual representation of market psychology in action.

The Psychology of Price Action

In the market at any given moment, there are buyers, sellers, and the undecided. The undecided are key because their fear and urgency push prices.

• Buyers (bulls) are in control when they’re willing to pay higher and higher prices, afraid they’ll miss out if they wait. This creates bullish (hollow/green) candles.
• Sellers (bears) are in control when they’re willing to accept lower and lower prices, worried they won’t be able to sell at all if they hesitate. This creates bearish (filled/red) candles.

Your job as a trader is to analyze this balance of power and bet on the winning side. A successful day trader is like a social psychologist armed with charting software.

Sometimes, the battle is a draw. This is where you see indecision candlesticks like Spinning Tops (small bodies with long, symmetrical wicks) and Dojis (the open and close are nearly the same, creating a cross shape). These candles signal that neither side is in control and a potential reversal in the trend could be coming.

While there are hundreds of complex, imaginatively-named candlestick patterns out there, I find most of them to be useless. They encourage wishful thinking. I focus on simple, clear patterns and the story each individual candle tells.

Core Day Trading Strategies You Can Use

Your approach to the market is your "edge." You need to find what works for you. I focus on a handful of strategies that are simple in theory but require practice to master. Remember, a huge portion of today's trading volume is from high-frequency trading algorithms. You're trading against machines. Your edge comes from finding the few stocks each day that are trading on such heavy retail volume that the algorithms get overpowered. These are what I call "Stocks in Play."

Before we get into specific setups, a word on trade management. This is what you do after you enter a trade. It involves knowing when to add to a winning position and, more importantly, when to cut a losing one. This is a critical component of risk management and trading psychology.

The single biggest mistake a new trader can make is "averaging down"—buying more of a stock as it drops in hopes of lowering your average cost. I learned this the hard way with a biotech ETF called LABU. I kept buying more as it fell, turning a manageable loss into a devastating one that got me a margin call. It only takes one bad trade to blow up your account.

Now, let's dive into some of the core day trading strategies I use.

Strategy 1: The ABCD Pattern

This is a classic and one of the easiest patterns for new traders to learn.

• (A) The stock makes a strong upward move.
• (B) It hits a peak as early buyers start taking profits.
• (C) The price pulls back and finds a support level that is higher than point A.
• (D) The price breaks above the previous high (point B) and continues upward.

The entry is near point C, once you see that support is holding. Your stop loss is a break below point C. This setup minimizes your risk because you're buying close to your stop.

Strategy 2: Bull Flag Momentum

This momentum strategy works well on low-float stocks (under $10). It looks like a flag on a pole.

• The Pole: A sharp, high-volume move upward.
• The Flag: A period of sideways consolidation on lower volume as early buyers take profits.

The entry is on the breakout above the high of the "flag" consolidation. The stop loss is a break below the low of the consolidation. This is a fast-moving strategy, so you get in, scalp your profit, and get out.

Strategies 3 & 4: Reversal Trading (Top and Bottom)

The idea here is simple: what goes up must come down, and vice versa. Instead of chasing a stock that has already run up or sold off, you wait for it to get over-extended and trade the reversal.

I look for a few key things:

1. At least five consecutive 5-minute candles moving in one direction.
2. An extreme RSI (Relative Strength Index) reading (above 90 for a top reversal, below 10 for a bottom reversal).
3. The stock is approaching a significant support or resistance level.
4. An indecision candle (like a Doji or a hammer) forms, signaling the trend is losing steam.

For a Bottom Reversal, you buy on the first 1-minute or 5-minute candle to make a new high after the sell-off. Your stop is the low of the day. For a Top Reversal, you short on the first candle to make a new low after the run-up, with a stop at the high of the day. This strategy requires patience—you can't try to catch a falling knife.

Strategy 5: Moving Average Trend Trading

Some stocks will respect a moving average (like the 9 EMA or 20 EMA) as a dynamic support or resistance line. In an uptrend, you can buy each time the price pulls back to and bounces off the moving average. In a downtrend, you can short each time it rallies to the moving average and gets rejected. Your stop is a confirmed close on the other side of the moving average.

Strategy 6: VWAP Trading

Volume Weighted Average Price (VWAP) is the most important indicator for me. Institutional traders use it as a benchmark for good execution. They aim to buy below VWAP and sell above it. This means VWAP often acts as a powerful level of support or resistance. I look to go long when a stock finds support above VWAP and short when it gets rejected below VWAP. My stop is always a confirmed close on the opposite side of the VWAP line.

Strategy 7: Support and Resistance Trading

This is my favorite style of trading. Before the market opens, I look at the daily charts of my chosen "Stocks in Play" and draw horizontal lines at key previous price levels where the stock has reversed. These levels often act as magnets for price. I then watch the price action on a 5-minute chart. When the price reaches one of these levels and an indecision candle forms, it's a confirmation. I can then take a trade, buying at support or shorting at resistance, with a very tight stop just on the other side of the line.

Strategy 8: Red-to-Green Trading

The previous day's closing price is a powerful psychological level. A "Red-to-Green" move is when a stock that opened below the previous day's close (it's "red" on the day) rallies and breaks above it, turning "green." This can trigger a surge of buying. Conversely, a "Green-to-Red" move, where a stock falls below the previous day's close, can trigger heavy selling. You can trade these breakouts, using the previous close line as your entry trigger and profit target.

Strategy 9: Opening Range Breakout (ORB)

The first 5, 15, or even 30 minutes of the trading day often establish a high and low for a stock, known as the opening range. Many traders wait for the stock to break out of this range before taking a position. For a 5-minute ORB, you would go long if the price breaks above the high of the first 5-minute candle, or go short if it breaks below the low. Your stop would be the other side of the range. This strategy works best on mid-to-large cap stocks. I often trade a 1-minute ORB, but this is an advanced technique that requires very fast execution.

A Trader's Journey: From Beginner to Profitable

Building on these core day trading strategies is one thing, but applying them with discipline is another. I want to share the story of John Hiltz, a member of our community and a retired Lieutenant Colonel in the Army.

When John started, he made all the classic mistakes: risking too much, revenge trading, and jumping between strategies. He had a "hulk" day where he lost 7% of his account trying to win back early losses. That was his turning point. He realized his approach to risk management and trading psychology was flawed.

He turned his trading around by committing to four simple rules:

1. Risk the same amount of money per trade. He started thinking in terms of "R" (his unit of risk). A loss was always -1R. A good win was +2R or +3R. This took the emotion out of individual losses.
2. Risk a small amount until consistent. He dropped his risk to just $20 per trade. His goal wasn't to make money, but to prove he could be profitable in terms of R. His account survived the learning curve because his losses were tiny.
3. Use hard stops. No more moving his stop loss because he "felt" the trade would turn around. A -1R loss is a great outcome compared to a -5R disaster.
4. Focus on a single strategy. He stopped trying to trade everything and focused on one setup he understood: the "Break of High of Day" (BHOD). He mastered it.

By focusing on a single, well-defined strategy and exercising strict discipline, John went from losing money to consistent profitability. His story is a powerful reminder that building a professional trading business isn't about finding a secret indicator; it's about mastering yourself and your process.