| Intra-Day
Trading Information
Daytrading
is something that MOST people should really learn before
they jump into it. Daytrading is not as easy as most
people make it out to be. There are many many small
trends on a 2 minute chart and daytrader's should have
the General Trading Knowledge
mastered before they try to apply these theories to
intra-day trading.
The
issues with daytrading are simple... more trends, fast
and short trends, as well as the trader has to be able
to execute trades and make decisions very quickly. I've
found the longer term charts (daily and weekly) to provide
excellent trading opportunities. So, my suggestion is
to daytrade only a portion of your total equity (maybe
10 or 20%).
There
are a number of excellent daytrading tools that are
available. Most of them are based on "range breakouts"
or "trend following" systems. Others are based
on "pivot points" and other advanced calculations.
The interesting fact about most of these is their simplicity
- they are providing (in some cases) simple theories
for daytrading. I'm not saying these don't work - in
many cases they do. These are often good sources of
information for traders that are new to daytrading.
Daytrading
for a living is another thing. Many times, daytraders
have to build up the "constitution" to be
able to do this for a living. Meaning, most successful
daytraders are those that have a system or method and
stick to it over and over and over. There is no "magic
formula" that will result in fanstastic results.
Most daytraders that I know plan their trades around
a theory or method they have faith in and continue this
process over and over.
As
I see it, there are basically two types of daytraders...
The
"Micro" daytrader and the "Macro"
daytrader - sometimes the two intermingle.
The
"Micro Daytrader"
This
individual concentrates on the microscopic moves of
price action and is often attempting to "scalp"
small points from a price trend. They attempt to scalp
at a rate of about 2:1, 3:1 or higher. Meaning if they
are trying to get $0.30 from a trade, they might risk
$0.10. They often use reversals, trend breakouts of
other forms of triggers - then place their trades.
Some
of these individuals use "tick charts". These
are charts that are based on the number of printed "price
ticks" instead of "time" (like other
charts). Often, they will use odd number tick charts
- like 280, 140, 95 or 33. Tick charts sometimes show
trend more clearly than time charts. Although, there
is one MAJOR drawback to these really short intervals
- CONGESTION.
Congestion
is the "killer" of most trading systems. There
are some who believe that you can trade congestion (probably
trading upper and lower ranges), but I actually doubt
it. When the trend is going sideways, scalping may work
for a while, but eventually losses will happen. My advice
to traders experiencing congestion, STAY FLAT till the
market breaks out of the congestion range.
Micro
daytraders are kind of a different breed. They make
calculated risks (often many times a day), and if they
are correct, they may end up ++ for the day. The better
their trigger system is, the more likely they are to
have more consistent profits.
The
"Macro Daytrader"
This
individual concentrates on the more of the overall price
trends and tries to trade "with the trend"
or "counter-trend". These traders are often
only trading once or twice a day (if at all). The purpose
of these type of traders is to find the best potential
trades and let the market make it's move. Kind of like
jumping on a moving train and riding it a while. Just
wait for it to start moving, then jump on for a ride.
Most
of the time, these traders have defined trading styles
or screening methods too. Sometimes, these traders play
"news stocks" or maybe "certain sectors"
- they are screening for stocks that have a potential
for a decent trend move. Other times, these traders
play certain markets (like the Emini, Forex or the QQQ
- that trend almost all the time).
The
interesting factor for most of these traders is they
almost always have different ways of attacking the markets.
This means they all use different strategies to generate
their trigger points. Sometimes it is a combination
of indicators, or a breakout system or possibly price
patterns.
I
guess the end result is, "There is more than one
way to skin a cat" (no offence to cat lovers -
I'm one too). But it makes sense that if there are all
these different kinda of entry triggers (and we assume
most of them work), then the difference has to be in
the "way the trade was executed" - or "the
trading plan".
Thus,
back to my original point, learning to trade and to
develop a trading plan is the most important thing any
trader can do to maintain a successful trading adventure.
Finding entry triggers and adjusting stop/profit target
levels is up to the individual trader. Knowing what
to expect and how to deal with the future of your trade
is the big difference. When you add a trigger system
that is 50/50 (or better), you should be able to consistently
make money - right?
Are
you ready for the next "twist" to this fast-paced
game for traders.....
The
"DOs and DON'Ts of Daytrading"
Yeah
- like I have a list that you can just read and follow.
I don't!
I
do have some advise though. In my 15+ years in this
industry, I have found that most daytraders don't just
concentrate on the short-term charts. They also review
the Daily and Weekly charts for other signs to support
their decisions.
Of
course, the "Micro-scalper" may not really
care about what happened yesterday or last week. All
they care about is today and how much trend will today
have. This gives them more opportunity to profit from
the markets.
I
quess what I'm trying to say is "Always track multiple
market time-frames because the more information you
have to make your decisions, the better informed your
decisions shall be". Yeah, knowledge really is
a powerful thing.
What
to do and what not to do?? Go back to
General Trading Help for that stuff...
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