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During the recent volatility and down-trending market, daytraders have done well. I'm not here to tempt people to "cross over to the other side," but I'm receiving more emails from investors who've recently gotten killed in the market and are interested in attempting to "momentum trade."

Most of you want to know what tools I use to trade. No, I don't sit in front of five monitors with three TV screens blaring in the background. All you need is a good computer, fast modem and an excellent direct-access online broker with comprehensive software and services.

Now let's take a look at some of the more common questions that come in.

I want to "momentum-trade." How do I pick a broker and which one do you use?

The most important criteria in choosing a broker seems to be how good their ads are on

CNBC

. Wrong! I look for a broker who is reliable and one that has an easy, yet sophisticated trading software. Speed of execution, confirmations, availability and willingness to help when you have a question or problem are also of the utmost importance. A broker should be willing to educate you about its services and software, and answer phones in a timely and courteous manner. I hate voice mail! Find a broker who answers the phones.

I find it best to stay away from the smaller, cheaper services, because as with anything in life, you tend to get what you pay for. One loss due to a slow or unreliable service can cost you 10 times the difference you pay by going with a reliable service.

My online broker's server crashed, my orders are never filled at the price I want, and customer service stinks. What are my options?

Sounds like you have a Web-based broker. OK, I'm dating myself here, but when I started trading, I executed my trades by calling a broker. It took several minutes to get him on the line and to finally get my order executed. Back then, it was quick enough, but as more traders joined the party, I needed faster executions.

Web-based brokers, such as

E*Trade

(EGRP)

, filled this need. When they started, I thought they were an amazing tool. After all, the trader with the fastest gun ruled the day! With the explosion of online trading, however, the volatility and momentum of the market changed forever. April 4, the day the

Nasdaq

swung more than 500 points in one day, proved this. This is the new market momentum.

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The methods I use are based on momentum and the resulting swings. To catch the bottoms and tops of these volatile swings, I need a quicker execution service than what a Web-based broker can provide. Thankfully I found direct-access brokers.

There are a few out there that target the active trader, including

MB Trading

,

A.B. Watley

,

Castle Trading

and

CyberCorp.com

, to name a few. New ones pop up everyday, but decide on service and not price alone. (For more on direct-access brokers, see a recent

Tools of the Trade column.)

Direct-access brokers are a great way to go if you make more than five trades a month. They offer lightning quick executions and confirmations with a real-time data feed. I can enter and exit the trades most of the time within a matter of seconds. Without it, I miss many of the entry points, and even worse, the exit points. Remember that with daytrading, your window of opportunity may only last from 30 seconds to three minutes.

Other advantages of direct-access brokers:

  • Flexibility: I can customize my software to give me the exact information I need on my monitor.
  • Real-time updating order screen: No more trade-confirmation screens (the ones that say, "are you sure?"). It cuts down on the critical seconds needed to execute the trade. With Web-based brokers, sometimes you need to be out of a trade but still have to wait to receive your entry confirmation.
  • Scan tools: I scan for gainers, losers, search for new highs, lows and intraday percentages and price breakouts.
  • Real-time accounting status: No more switching back and forth between order pages, account status pages and research sites. It's all on one page and updates right in front of you. Once you try it, you will never hit another refresh button again.
  • Direct-access order routing: When you issue a buy or sell order, there are many routes it can take. It can go through the Small Order Execution System (SOES), Selectnet, Archipelago or Island, to name a few. If you have a Web-based broker, it will most likely make the choice for you. With a direct-access broker, I make the choice.
  • Direct-access brokers answer their phones. (The good ones do, anyway.)

Web-based brokers have realized their limitations and are finally trying to offer quicker, more trader-friendly services, but until they spend less time on their ads and more time on their software, my money is with direct-access brokers.

I tend to get overwhelmed by all the data coming in on my trading screen. I think I have too much on my screen. How do you set up your quote screen?

I know you won't believe it, but all of my trade decisions are made from my Level I screen. Level I is what people normally see: quotes, volume, trades, bid, ask, close, open, etc. Level II, used by some daytraders, adds a lot more information, including best bid and ask, supply and demand, resistance and the relative strength and weakness of a particular stock.

I have always traded using Level I only. I have found that traders get easily overwhelmed with a sea of data by having too many bells and whistles such as Level II, charts and time sales on the screen.

Reading Level I is like learning how to read music. When I first started trading, Level I looked like a panel of blinking lights that made the space shuttle control panel look tame. However, after a while I could see stock oscillations, not just moving but moving in waves. I learned to see them bottoming, topping, pausing, stalling and speeding up. As I gained more experience, I learned to anticipate how they were going to move based on the rhythm. Eventually, I learned to watch around 40 stocks at once.

From my Level I quote screen (

click here for an example of what it looks like), I can not only identify the price of a stock, but also the direction, amount of interest and a bit about the overall market. Everybody is different, but I set up my screen to show the following:

  • Ticker.
  • Trade volume: Number of shares from the last trade.
  • Last trade: Price where the last trade was made. Green if higher than the last trade and red if lower.
  • Bid: Price where you can sell a stock.
  • Ask: Price where you can buy a stock.
  • Net change: Difference between the current price and the previous day's closing price.
  • High of the day: Highest price the stock has reached during the day.
  • Low of the day: Lowest price the stock has reached during the day.
  • Total volume: Number of shares traded (both buys and sells) during the day.
  • Open price: This is where the stock opened that day.
  • Previous day's close.

Try keeping only Level I on your screen at first and concentrate on only a few stocks at a time. If you try to watch everything, you will see nothing and be overwhelmed. You gotta walk before you can run.

Ken Wolff is founder and chief executive officer of Paradise, Calif.-based MTrader.com, a daytrading and swingtrading Web site. This column provides general information about momentum trading. TheStreet.com has no affiliation with MTrader.com, and no endorsement of MTrader.com or momentum trading is intended. While Wolff cannot provide investment advice or recommendations here, he invites your feedback at

ken@mtrader.com.