Trading Methodology

"So, what's the secret to DaytradeTeam's profitability?"

There is no secret. We work hard and we work smart. We've all seen so-called trading systems that promise to provide you with some magical loophole or computerized trading model that "backtests" 100% winners but delivers nothing but disappointment. It's time that you had access to the methodology and strategy of success that only DaytradeTeam can deliver. Whether it is in our Live Trading Room (Click here for demo) or via email, every trade alert we send you will include the reasoning and analysis behind the trade, so you will always know what to do and why we are doing it.

We believe that successful stock and options trading comes down to three basic components:

1. Technical Analysis + Common Sense = Profits

Technical analysis means using the past trading history of a stock to predict future movements. We know that technical analysis works very well when done properly (and a total disaster if not). Here are a few of the indicators, strategies and techniques that we utilize for our stock and options trading signals:

• Trend-Channel Analysis--Find the channel that the stock is traveling in and look for opportunities for entry and exit based on current placement within the channel and overall channel direction..
• Support/Resistance Levels-- Areas of past consolidation and repeat reversal points can give you a huge clue to the prices at which big money is moving into or out of the stock
• Volume Pattern Analysis -- If a stock moves on little or no volume, did it really move?
• Relative Strength/Weakness to Market(s) --When a stock bucks the overall market trend, we listen. Understanding the movement of a stock or index in context with the applicable sectors or markets of the world is crucial to predicting how the stock will react in the future.
• Short-term, Mid-term and Long-term analysis -- Just because the 2 day trend is up doesn't mean the stock is a good buy. We look for stocks that have significant and consistent buy/sell signals in all three of these time-frames.
• Wave theory -- Breakouts occur when a stock's ripple becomes a wave and then turns into a tsunami. Acceleration of the current trend is a signal that big profits lie ahead

But wait! Trading stocks and options based on technical analysis alone can be profitable, but we prefer to add a pinch of common sense. We don't play with stocks that have huge news pending, earnings announcements, buyout rumors, crazy IPOs or any other unpredictable or overly volatile situation. You can rest assured knowing that every trade alert you receive in your Day Trading, Swing Trading and Options Trading Systems have met our rigorous criteria of technical analysis.

2. A Mathematical, Statistical Approach to Trading

Our trading experts are obsessed with the methods by which mathematics and statistical analysis can be applied to stock and options trading. The goal is to consistently produce trades that have a net positive anticipated profit/loss. The anticipated profit/loss of a trade is determined by the following equation:

Anticipated Profit/Loss = (Probability of Profit * Profit Amount if successful) - (Probability of Loss * Amount Risked)

For example , if a trade has only a 45% chance of being profitable, but it would make you $1,000 if successful and only lose you $500 if not successful, then the Anticipated Profit/Loss would be calculated as follows:

Probability Profit Weighted Avg. Success Scenario 45% $1000 $450 Loss Scenario 55% ($500) ($275) Average Trade Scenario + $175

A positive anticipated profit/loss of $175 means that the trade is worth making, even though it is more likely that the trade will be a loser than a winner. It is this kind of mathematical approach to trading that puts the odds in your favor over time, and is the foundation for why DaytradeTeam has been so successful for so many members.

3. Risk Control, Risk Control, Risk Control

Reality check! Not every trade we make will be a winner. That's why our systems are designed to reduce risk on every trade, every day, every time. By reducing the amount that you lose on trades that don't go your way, you will put less pressure on your trades to be winners. More importantly, the emotions involved with large losses will be virtually eliminated and allow you to focus on what's important--your trading! Here are a few ways that we control risk on the trades that we alert:

• Specific Stop-Loss on every trade
• Trade entry near significant support/resistance levels to reduce exposure to trend/market reversal
• Diversified allocation techniques through all-inclusive membership pricing