Bryan Perry

3 Secrets of Successful Day Traders

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This place is like the island of misfit toys. I've walked the floor of the Amex and I can tell you that most of the floor traders I came in contact with shower only once every couple of weeks. It's hard to find a full set of teeth.

There is a certain foregone conclusion by veteran Wall Street traders that if you conduct business on the Amex at the market, you should expect to get at least "a little screwed" by those castaway, NYSE-wannabe floor traders.

If Johnny Depp is looking to do another sequel, he should play the lead in Pirates of Manhattan: Life on the Amex.

Secret No. 3: A large short position deserves much respect.

As we all know, there are two sides to every trade, yet only one side can be right. It is human nature for most people to be optimistic and, therefore, to look for positive stories to trade off of; especially in an up market.

Shorting stocks requires that you to go against human nature. In an up market, it takes real fundamental conviction to go short. When shorting is done in size, be assured that someone has done some in-depth research and found one or more major negative components that call into question the underlying fundamental story of whatever stock is being traded.

The short side of the market is smarter than the long side. Therefore, when you see a company with more than 10% of its stock shorted out, do your homework. Learn what the short argument is before you decide to go long.