Day Trading FAQ
Here are some questions and answers that summarize the benefits of a DTI education and will further your understanding of global day trading.
A: DTI was founded in 1996 by veteran trader Tom Busby, a professional securities trader and broker for more than 20 years and author of "Winning the Day Trading Game." Chief Instructor Geoffrey Smith (one of Tom's first students) has been on board since 2000.
Q: Who are the key people at DTI and are they successful traders?
A: DTI was founded in 1996 by veteran trader Tom Busby, a professional securities trader and broker for more than 20 years. Busby’s lifelong career in the markets started as a money manager with some of the world’s largest wire houses. He then moved into the private sector and started training others about the global markets. With guest speaking spots on Bloomberg and CNBC, he is also the author of two best-selling books, Winning the Day Trading Game and
The Markets Never Sleep. Busby has served as an educator in weekly online webinars for the Chicago Mercantile Exchange, where he has been a member since 2002. He was also a Member of the Chicago Board of Trade, who has also called on Busby to trade live in CBOT sponsored events at some of the largest trade shows in the industry. Tom holds a bachelor's degree in Business Administration from the University of Georgia and a Juris Doctorate degree from Oklahoma City University School of Law. He was a distinguished graduate of the United States Air Force Budget Officer School, and served seven years as an officer in the United States Air Force prior to becoming a professional securities broker and trader.
Geoffrey Smith serves as DTl's Chief Instructor and as a mentor to DTI Students via an online trading room. He offers daily market commentary during portions of the trading day as well as serving as the Senior Technology Officer. Geof earned a Bachelor's in Engineering in 1989 from Oklahoma State University and a Masters in Engineering from Southern Mississippi in 1992. He was employed with Nickles Industrial from 1991 through 2000 when he joined DTI. He had various positions while with Nickles starting as a design engineer and moving up to the Operations Manager position, which he had at the time of his departure.
Q: What kind of classes do you offer?
A: Our 10,000 square foot training facility is located in Mobile, Alabama. We are aimed at teaching both beginner and advanced traders to trade in the global futures market.
Our on-line Home Study Course is a good starting point for a new trader. Our teaching methods emphasize both the academic education and the trade execution skills that are required for success.
For our Foundations Trading Course you get everything in the home course including the DVDs and CD-ROMs delivered prior to your arrival to give you time to preview the information and make the most of your classroom experience.
For experienced traders and returning students, we offer a live 5-day Advanced Trading Course. You get everything from the other courses plus a 5-day classroom experience to learn advanced trades and techniques and hone your skills under the watchful eyes of our traders. Special emphasis is placed on the psychology of trading and maintaining control of emotions.
We also host our DTI Live TradeRoom. Each morning, you'll log in and catch DTI's live analysis of how the day's markets are shaping up. Follow along as our traders evaluate whether the indicators are telling them to be long, short or out and watch them execute trades as they explain their thoughts and rationale.
You'll feel the adrenaline as you watch professional traders like Tom and Geof put their own money on the line in live trades.
You'll watch live streaming video of our trader's computer monitor as he executes trades using indicators from the Global RoadMap™ software. You'll hear live audio as he explains exactly what he's doing.
Through our home study course, on-site training classes, live on-line Day Trading Chatroom, and continuous technical & customer service support from the entire staff, DTI has found a recipe for success for our students. You can read more about DTI on our "About DTI" page and also read what our students say about DTI on our "Testimonials" page.
Q: Why should I travel to Alabama to learn trading?
A: DTI is located in Mobile, Alabama. Click here for a Google Map (will open a new window). This is where we teach our live courses. Mobile is a charming Gulf Coast city, rich in history and culture and full of exciting activity. Yes, we step away from the 24-hour futures markets periodically to experience life.
Take a look at Mobile's official tourism site (will open a new window) to read about our attractions, including the USS Alabama Battleship, 21 Golf Courses,the birthplace of Mardi Gras and some fabluous seafood and nightlife.
Don't worry about being bored during your stay!
The Classroom Experience
Here are some of the reasons we feel and our students tell us you should consider coming to Mobile to participate in the "live" version of our class.
- You'll be with like-minded people all learning
the same skills- Better supervision of the hand-on activities
- Direct access to instructors and traders for
answering questions- Focus - Leave the distractions of home behind
- Technology - We have high-speed secure wireless connections for your in-class trading
- The DTI Community - We want to get to know you because you'll be a part of our family
Q: What are my first steps to getting started as a day trader?
A: Get started by learning everything you can. Read Tom's book, "Winning the Day Trading Game." Follow along with Tom and other experts in our Live Trading Chatroom. If you are just testing the waters, you could start with our Home Study Course. If you are already an active trader, enroll in our Foundations Trading Class or Advanced Trading Class in Mobile, Alabama.
Q: Could you state what your money management discipline is?
A: Stop management, risk vs. reward, trade zones, and other elements are explained in the course. It is important to note that each individual trader is different; therefore, results will vary. In "Successful Trading -- The Middle Ground", I talk about the balance of fear and greed. Also, we do not teach a system -- it is a methodology and that distinction is of major significance. Therefore, it is not possible to be specific in response to some of the following questions, because there is no one answer. For example, two individuals making a trade at the same time based upon the methodology could have widely different results due to the skills, psychological make-up, and other extrinsic and intrinsic variables unique to those two traders.
Q: What type of support can I expect after I take the class?
A: This is one of the unique aspects of the DTI. The DTI Pre-Market Planner is continued for a lifetime upon signing up for the class. New students are provided with 30 days free access to the Live Trading Chatroom prior to the class. The mentoring process continues with students for at least the first 10-12 trades, but our goal is for our students to be successful. Therefore, we make ourselves available to students for phone and e-mail consultation/mentoring. We also have Advanced Courses for students who want to come back for additional training.
Q: Are these rules subjective or are they objective, i.e., black and white or gray?
A: This is a time-tested methodology, but it is constantly under change and revision based upon changing market conditions. Only a methodology that is subjective can be effective. There is no golden fleece. The RoadMap™ Methodology is simple but not easy.
Q: What tools / rules do you use to initiate trades?
A: The RoadMap™ Methodology consists of:1. Key Numbers. Key numbers are price levels that most traders call support (where the market has buyers stepping in supporting the price) and resistance (where sellers are stepping in and offering the market.) These numbers help the trader in finding the balance that is critical to success: when to temper greed and when to overcome fear.
2. Time of Day. The DTI Method focuses on certain "time segments" for trading. Since the market is a combination of people's beliefs and how they vote those beliefs (either by being a buyer or a seller), it is very important to have a good understanding of people. Observation proves that people are creatures of habit, and that people generally do the same thing -- whether it is for good or for bad -- every day. I have observed that there are market reactions to how and when people rise in the morning, or go to lunch, or go home for the day. Since we are part of a global economy and the S&P 500 is a world market, you can watch the behavior of the markets and see that there are very discernible time-based trends that can be used in combination with key numbers in the balancing act of trading.
3. My RoadMap™. The Global RoadMap™ Software is a proprietary software program we have developed based on more than 50
combined years of observing the market. It allows us to track the market 24 hours/day. The RoadMap provides a constant watch of the indicators that make up the direction of the market. It is an analytical tool that we use to evaluate the market and answer the question of whether to be long, short or out of the market.
Q: How long have you been involved in the securities business?
A: I first started buying stocks in the mid 1970's while I was stationed in Europe. My first two stocks were Eastern Airlines and Pan American Airlines. They were both cheap in price and were two companies that had a product I used. But I didn't really get involved in the stock market until I completed my tour of duty.
Q: How did you end up as a futures trader, advisor and educator after getting a law degree?
A: Upon returning to the states I transferred my account to Merrill Lynch and became more and more interested in the stock market. After being hired as a broker, I discovered the futures market reading an article in the WSJ introducing the S&P as a futures contract, and I knew that if I were to have any security in the business I needed to be able to approach the market from both the long side and the short side. As far as becoming a trader, my personality required me to put my own money on the line. That is a fundamental belief that hasn't been altered since the beginning. Having been trained as a lawyer, I always look at both sides of any decision. To be successful as a trader, such analysis is required no matter what approach you may decide to use.
I started the school after a client suggested that I should share the lessons I had learned in my trading with others. So I placed a small advertisement in IBD (Investors Business Daily) and was surprised by the response. There was a hunger out there to find a method of trading that was concise, straight-forward and logical. One of the reasons I have continued with the school is that I found that teaching others forces me to practice what I preach and helps keep me focused. The school is filling a need I have and has enhanced my personal trading success.
Q: Which markets do you usually trade?
A: I have been day trading since the early 1980's, when I began searching for a market that featured elements that could lend balance to my trading. I found those balancing characteristics in the S&P 500, a futures contract that trades on the Chicago Mercantile Exchange. However, while my primary focus is the S&P futures market, my methodology is applicable in any freely fluctuating market. My approach allows me to always place the odds of success in my favor. I just happen to like the S&P for the unique qualities that it provides. In September, 2001 I started trading the German DAX Futures when the US Market closed down for 4 days. Since then I have also added the CBOT's mini-DOW contract as well as the Euro Currency as vehicles I will trade when the opportunity is there. I use my approach as a timing tool for the equity markets as well. It is easier to go in the direction of the majority of stocks, whether up or down, rather than trying to find the needle in the haystack.
Q: What advantages does the S&P 500 futures market offer that the equities market doesn't?
A: First, the S&P features a great deal of liquidity. The market for the S&P 500 futures contract has become sufficiently large, with a substantial daily trading volume. There is an ample supply of both buyers and sellers, which reduces the risk that a trader will be unable to get in or out of a trade at a chosen price.
The second advantage is that the S&P also has a high degree of price volatility, with alternating upward and downward movements in short time intervals. This creates the opportunity to take both long and short positions throughout most trading days, correspondingly creating opportunities to make profits.
A third trait I enjoy is the S&P's accessibility. The S&P 500 futures market operates virtually 24 hours a day, and it is also accessible via electronic trading platforms offering ease of trade placement.
Fourth, there is a great deal of leverage in the S&P 500 futures market. The cost of admission is reasonable -- I can control approximately $300,000 worth of stock value for a margin requirement that is typically only 1% or 2%, and I can enter and exit a position for less than $10.00 in commissions.
Finally, I appreciate the degree of risk management the S&P yields. It is easy to place stop loss orders to hedge every position I take. This permits prudent risk management to contain losses to affordable levels in order to allow me the chance to be wrong on a trade, but still preserve my trading capital.
A: The most important thing to realize is that my approach is an ever-evolving work in progress, and I don't think anyone's education in the market is ever complete. I have been trading the S&P since its inception. The strategy I use to trade is based on my actual trading experiences, not theory. Over the years, I have learned to eliminate BOZO mistakes, and to change the relationship between analysis and execution. In the early years, I spent 98% of my time trading and 2% of my time thinking. Now that is reversed. In a typical 24-hour trading day, my method only allows about 120 to 150 minutes of trading time. This allows more than ample time for analysis and reflection.
A: Key numbers act as support (where buyers step in) and resistance (where sellers step in). Key numbers are used to enter trades and exit trades (both in setting targets to take profits and in setting stops at which I know that my analysis is wrong.) Also, my key numbers allow me to evaluate market strength or weakness. Time of day integrates both human behavior and the global markets with its different time segments into a highly efficient constant that allows me to evaluate, analyze, and execute with precision timing. People are creatures of habit, and I have learned to correlate the habits of traders with the price action of the market. For example, 11:00am CST to 12:30pm CST is what I call "lunchtime in America." The astute trader can expect volume to dry up as brokers/money managers and run-of-the-mill traders from New York to Chicago to San Francisco go to lunch. An example of using time of day and key numbers to trade is that in January of '01 I established that long-term support existed in the S&P futures market at the key number of 1118. On March 22, 2001 and again on April 10, 2001, I used this number to buy the market during the lunchtime in America trade zone. Also, this buy signal in the S&P triggered my purchase of stocks that I had pre-selected that were tracking with the S&P, including IBM, Amazon, and the QQQ. My use of both time of day and key numbers allowed me to be ahead of the crowd and capture those gains.
A: The Global RoadMap™ Software is a customized proprietary software I have designed around my trading method. A constantly evolving program, it allows both the trader and the active investor to answer the most important question: whether to be long, short, or out of the market. This is based on a host of indicators that have historically been successful for me in determining the market's direction. The software follows the market 24 hours per day, allowing a trader freedom from having to constantly stare at the computer screen while simplifying the decision making process. After years of trading, the RoadMap™ has stood the test of time. It is important to note that some of the specific indicators used have changed in the past and will change in the future. The market is an ever-changing entity and therefore, it is crucial that I am able to change the elements within my methodology to reflect that evolutionary process of the market.
Now let's review the RoadMap™ so that everyone understands it. The indicators we place at the top are as follows: The S&P is the General; it is how Wall Street pays itself. If you did better than the S&P, then you are rewarded, and if you did worse than the S&P, then you were not very successful. The S&P is not only my primary trading vehicle, but my primary indicator as well (ES H5, the symbol for the March, 2005 S&P e-Mini futures contract.).
During the U.S. morning session I use the NASDAQ Futures (NQ H5) and the German DAX Futures (AX H5-DT) for trend awareness. I might also use the $SOX to track the technology sector.
The major indicators I use are rounded out by DTI's proprietary indicator, the TTICK. The TTICK is based off of a formula that includes the S&P 500 and the NYSE TICK. It takes the noise out of the market and helps me clearly see the trend. The TTICK is considered bullish above 10 and bearish below 10.
The other two futures contracts, the Dow (DJ H3) and a leading stock, for example EBAY, are important corollary indicators. These two indicators, with the S&P futures contract, confirm the overall mood of the people trading the markets. If they are moving in the same direction, then you may be seeing a trend emerging. If one is green and the other is red, then we readily see that the odds are not in our favor, and we will stay out of the trade.
The TRIN (used to describe NYSE advancing issues divided by declining issues over advancing volume divided by declining volume) is an inverse indicator. The higher the TRIN the more bearish the market, and the lower the TRIN the more bullish the market. An indicator goes from green to red when it falls from the previous value (except in the case of bonds and TRIN which are inverse indicators). For example, if the NQ is green and the DJ and S&P are red, then I would not make a trade. I want all my ducks to line up providing me with the highest probability of making a profit. I believe that the smart thing in trading is to ride the horse in the direction it is already going. If the RoadMap™ is indicating that the market is heading in one direction, then why would I try to steer the horse in the opposite direction?
A: First and foremost, I worry about risk. In other words, I closely examine what are my downsides. Prior to any trade, I first determine the stop-loss, or the point where I know my analysis is incorrect. New traders take profits too early. They have a tendency to jump out of trades based on their emotions, rather than relying on prudent money management principles. The key to any trader's success is having an exit strategy (stop) before ever putting money at risk. This is why proper stop management is so important. With a stop in place, a trader can remove the emotional turmoil while taking the profits sought. On the other hand, if a trader doesn't use stops, he has no chance of success.
