Chapter 1: Introduction

Chapter 2: Day Trading

  • Day trading involves technical analysis to exploit short-term inefficiencies for profit, and is not considered a form of investing, which focuses on fundamental analysis and providing capital to help companies grow.
  • Day traders hope that their more active approach to trading volatile stocks will lead to higher returns, whereas long-term investors aim to make smaller returns with less effort.
  • The techniques described in this book are geared towards trading stocks and ETFs on US markets.

    Chapter 3: Stock Market

    • The stock market operates as a double auction, with buyers and sellers trading on two independent sides of an order book.
    • Market orders are filled at the current best price in the order book. Traders are vulnerable to wild price swings when using market orders, but are more likely to have their orders accepted and executed by the exchange. Market orders are preferred for The RST Way of trading.
    • Stop losses are used to limit losses on a trade and are critical to day trading success. Hard stop loss orders at a specified price are required for binomial-process trading (The RST Way).
    • The market opens at 9:30 a.m. EST, the day’s busiest period with the highest volume and volatility, and prime time for day trading.

      Chapter 4: Brokerages

      • Commission-free trading apps like Robinhood and Webull are not recommended for serious day trading.
      • Direct access platforms and brokers are preferred by professional day traders.
      • DAS Trader is the only trading platform that fully supports the hotkeys needed to execute The RST Way of trading; however, it is possible to trade The RST Way in a less automated fashion on other platforms.
      • With per-share pricing at Interactive Brokers and CenterPoint, commissions and fees are driven by the number of shares traded. Trading higher-priced stocks means fewer shares and smaller commissions and fees.
      • Most day traders use margin accounts, which provide leverage and amplify buying power.
      • IBKR Pro Per-share Fixed is the cheapest commission structure for new, low-volume traders.

        Chapter 5: Stocks in Play

        • Day traders use software called scanners to find Stocks in Play based on price, overnight gap, float, pre-market volume, and other criteria.
        • Trade Ideas is the de facto scanner for day traders.
        • Not all results from scanners are suitable for day trading. News, volume, and clean price action can serve as discriminators to ensure the right symbols make it onto your daily watchlist.

          Chapter 6: Trade Playbook

          • Candlestick charts, Time & Sales, and Level 2 are the trifecta of stock price information and allow traders to see into the past, present, and future of a stock’s price.
          • Candlestick charts provide a graphical representation of a stock’s historical price and provide traders with a look into the stock price’s past.
          • Time & Sales shows traders a stock’s order flow and provides information about what is happening to a stock in the moment.
          • The Level 2 order book can often act as a leading indicator, helping traders see into a stock’s price future when informed traders place large orders on the order book, signaling a trend in that direction.
          • Mass psychology drives stocks to make predictable moves near support and resistance levels.
          • ORBs, ABCD patterns, and Reversals are three great candlestick patterns for beginner traders.

          Chapter 7: Risks

          • A landmark 2014 study using Taiwan Stock Exchange data found <1% of day traders achieve consistent, net-of-fees profitability, highlighting how rare sustained success is.
          • The primary differentiator is rigorous risk management, not indicators or setups; superficial rules (e.g., “risk 2% per trade”) are insufficient to reach top-tier performance.
          • Most traders fail due to structural risks like gambler’s ruin and drawdowns, where losing streaks and compounding losses make recovery mathematically difficult or impossible without strict controls.
          • Additional failure drivers include black swan/large-loss events, recency bias, over-complication, poor share sizing, and flawed risk/reward balance, all of which can erode profitability even with a high win rate.
          • The RST Way is a fully systematized risk control approach—fixed risk/reward, predetermined exits, and automated position sizing—to eliminate large losses, reduce psychological errors, and create consistent, analyzable performance.

          Chapter 8: The RST Way

          Risk management – The RST Way – is:

          • Binomial process trading with fixed R/R ratio, fixed win/loss amounts, automated share sizing, and predetermined exit prices.
          • Best done in DAS Trader by leveraging its hotkeys and range orders.
          • A locked-down system that breaks even when randomly going long or short, similar to flipping a coin, and one that is profitable when basic market awareness and trading skill are added.
          • Recognition that bad luck and losing streaks are inevitable, to which we respond by: 1) never risking more than 1-2% per trade, and 2) never analyzing our trade performance on a sample size less than 100 trades.

            Chapter 9: Trader Profitability

            • Profitability in The RST Way is not just about win rate and R/R ratio; it also depends on risk size, account size, buying power, and trade frequency. To maximize income, all of these factors have to work together.
            • A profitable system will still have red days, red weeks, and even red months, so traders must learn to distinguish bad luck from bad trading instead of overreacting to every downturn. That is why RST traders review performance in blocks of at least 100 trades.
            • One of the biggest advantages of The RST Way is its simplicity: each trade is defined by entry, stop loss, and R/R ratio, which makes it much easier to diagnose what is actually hurting profitability.
            • If win rate is too low, the main levers for improvement are better pattern recognition, better-timed entries, better stop-loss placement, and possibly a different R/R ratio before moving on to changes like different stocks, timeframes, or times of day.
            • Once a system is working, the best ways to increase trader income are to grow the account, modestly increase risk, increase trade frequency, or add additional playbooks—not to constantly tinker with a profitable system and ruin it.

              Chapter 10: Going Live

              • Day traders are incredibly lucky that simulator trading is almost identical to the real thing, especially for smaller accounts where slippage is negligible, so there is no excuse not to use simulator aggressively before risking real capital. Spend 3–12 months in sim, and put every new playbook through at least 300 trades before taking it live.
              • Becoming profitable requires serious repetition, resilience, and immersion—not a couple casual hours here and there. You need to trade every day, review your blocks, refine your playbook, and accept that the first few months may be ugly. That is normal. The key is to keep logging blocks and improving instead of getting discouraged.
              • The best time to go live is when your simulator results show three consecutive trade blocks above breakeven (or close enough to strongly suggest the system is real), meaning your observed results look like they are coming from the target win-rate distribution. In other words: don’t go live because you feel ready—go live because the numbers say you are.