Matt Nadel is a true daytrader who holds his positions for about five to ten minutes. As he will tell you, he knows within the first few seconds of a trade whether it will make money or not.

In this interview, Matt describes exactly how he trades and how he combines price action, order flow, and charts to spot great opportunities. Matt explains how he decides which stocks he will be trading for the day and why he favors those that have specific characteristics.

Using a recent trade as an example, he takes us through each step of his decision-making process and shows us how he spotted the trade, entered it, and exited for a profit. He describes what he is looking for on Nasdaq Level 2 or the depth of market (DOM) screen and the clues he sees that tell him the market is ready to offer him a money-making trade.

Play in Windows Media format

Play in RealPlayer format
Play mp3 stream

Direct link to mp3 file

Tim: Hello everybody, Tim Bourquin here for Thanks for joining me on the program today. Our guest today is Matt Nadel and he's going to talk to us about how he finds good trades, the ways he approaches the markets, and this overall philosophy for finding good opportunities. So, first of all, Matt, thanks for joining me on the phone today.

Matt: Thanks for having me on, Tim.

Tim: All right. So start off with talking about the type of trader you are. Are you a swing trader or a day trader and then what market do you trade?

Matt: Sure. I am a daytrader of the US Equities markets. I do very little swing trading, but 95% of my trading is daytrading and I focus on the most volatile names in the US Equity market so typically names that have large intraday price ranges, sometimes the high flyers like Apple, Priceline, Google, BIDU stocks of that nature.

Tim: Okay, good. Our listeners will of course hear this after we've recorded, but today Apple had a big announcement and so did that provide some good opportunities to trade Apple?

Matt: It did. I actually was focused was on some other stocks I've been trading during the day, but, yeah. I mean Apple filled off really heavily with the announcement of the iPhone 4GS, I think is what they're calling it, and then sort of when Apple rallied in the last hour of trade is really when the market took off and definitely a crazy day of trade. And a lot of times, I also look at Apple not only as a stock to trade individually, but also as a stock to sort of get a tell on the entire tech sector.

So if I'm trading another tech name or even a semiconductor name, I'll look at Apple, sort of look at its price movement while I'm trading that other stock as well. It's so interesting. Trading Apple during those big product announcements is completely different than trading it any other times. It's its own little world.

Tim: Let's talk about what you look for on a daily basis. Can you kind of give us an idea of how your morning works, what you're looking for, what types of charts you're watching, that sort of thing?

Matt: Sure. So, all of my trading in general is centered around two things, which is price action and tape reading. By tape reading, I mean looking at the level 2 box, trying to identify buyers and sellers, trying to identify the footprints of larger traders, institutional traders, high frequency traders.

And so really to that end, in the morning and basically throughout the day, I'm looking for stocks that are exhibiting unusual behavior. By unusual behavior, I mean stocks that have unusual volume spikes, stocks that are moving up even as the market is moving down or moving up even as the rest of the sector is selling off or the converse that, or even unusual activity not necessarily how it's trading, but unusual activity in the actual level 2 box, how the bids look, how the offers look.

So, my workflow through the day is I'm looking at filters in my trading software and then I'm rifling through stocks. I'll type up a stock and if I don't see anything, I'll type up another stock. If I see something in a particular stock, I'll set an alert for it or I'll make a note of it and then it's sort of finding those opportunities and then having a workflow to manage those opportunities throughout the trading day.

Tim: All right. So finding those stocks that are the most volatile probably means they're in the news either the day before or that day for some reason.

Matt: Right.

NEXT PAGE: What to look for...