Some Day Trading Tactics That You Should Learn

Day trading may seem easy for some people, but it is a lot harder than it seems. Others felt the need to do an intensive study on the financial market before they could achieve success. But while gain is relatively hard to attain, it is not impossible. Here are some strategies that might be helpful for traders.

Concentrate on a certain group of stocks like currencies or financials. Or you may decide to look into other kinds of companies like technology and oils. In any case, make sure that you know how the industry works. With that information, you can make better analysis and, in the process, make better decisions with your stocks.

In buying stocks, some use charting software with built-in hot lists. One strategy is to pull up the hot list and look at the stocks being traded. If you find one that meets your criteria, then purchase the same. If none of them meets the criteria, then do not do any trading for the day. Experts will tell you not to dwell too long on one kind of stock, as you may tend to purchase it even if you must not.

Another strategy is to concentrate on one trade per day. There are some long-term traders who swear by the saying "less is more." More trading does not necessarily result to successful trading. By making single transactions per trading day, they feel that they've made better decisions.

But this does not necessarily mean that multiple transactions should be avoided. Some traders like the idea of making multiple transactions because they think that their money moves faster, and in effect, profit as well.

But never spend more than you can afford. While loans may be readily available, remember also that you need to pay the amount loaned plus whatever charges and interest. Investing all your money is risky, so make sure that you do not use all of it.

These are some tips which you can use when day trading. You may follow one of the strategies or define your own by integrating one or more of them. Some experts suggest on not deviating from your plan or strategy. On the other hand, there were some who changed plans and got the results that they wanted. Whichever plan you choose, in the end financial gain is all that matters. So it is important to trade wisely at all times.

Day Trading Tips - The Don'ts of Trading

Day trading can be really complex and uncertain. Many people have blown their money because of it. However, this should not be your fate. Read the list of the trading don'ts and pick up some things that are helpful to you.

Do not blame the market for your mistakes, remember that you, alone, are responsible for you actions.

Do your homework beforehand; getting substantial information on a specific trade will make it easier for you to profit from it.

Do not be afraid to lose some money, the realization that everyone loses money at some point of their trading gives you an equal footing with the most successful traders.

Do not trade your child's college tuition money, the payment for your bills or your food allowance unless you are ready to beg for your next meal.

Do not complain about how risky the market is, that's the way it has always been and it doesn't care for your complaints.

Do not chase trades. If you are losing trade after trade, just stop and let go of them.

Don't fall in love with a single trade. If it no longer works for you then try to break any emotional attachments you have with it.

Never forget that you are incurring risks with each trade you make but the risks should always be used to your advantage.

Don't focus too much on lost opportunities. You have lost before, why should you worry about that now. There are too many opportunities lying around the corner that you can no longer afford fretting on what should have been.

Do not look for secrets in day trading, there aren't any.

Never rely on somebody else's opinions; they are only as good as your own.

If something bothers you, don't trade. However, you must try to identify the cause. If it is fear, greed or any other negative emotions, you should tally them with mathematical or scientific bases.

Don't be foolish, encourage yourself. Self affirmation will give you confidence in your decisions. Do not go down to the point where you are cursing yourself, saying how much you hate the decisions you made. Instead, affirm your decisions and tell yourself how good a trader you are.

Never get bored. Some people only trade because they are plain bored. If you cannot trade today or you cannot find good positions then don't trade. This will give you a day off and save you some losses.

Embracing Chaos When Trading And Investing

The "Butterfly Effect" refers to the idea that a butterfly's wings might create tiny changes in the atmosphere that ultimately cause a tornado to appear (or prevent a tornado from appearing). The flapping wing represents a seemingly irrelevant action that can cause tremendous long-term effects. In other words, had the butterfly not flapped its wings, the outcome might have been vastly different.

"Chaos Theory" is a financially related term for the Butterfly Effect. Proponents of Chaos Theory believe that price is the very last thing to change for a stock, bond, or some other security, and that price changes are created through a trader's own personal motives, needs, desires, hopes, fears and beliefs. In addition, those who believe in Chaos Theory believe that it is about explaining apparent disorder in a very ordered way, and that things are not random, just complex.

Financial markets, from the outside, appear to be random and unpredictable, but - as all traders know - every single financial decision is made consciously and is, in fact, the opposite of random. Yet, with the complexity of the trillions of financial decisions made every day, the results can appear to be far from rational.

So, the markets can create an atmosphere of "regulated chaos." Is that something traders should consider as they make their trades? Absolutely. Should they worry about the Chaos Theory and the Butterfly Effect? Probably not. Through risk management, knowing your tolerance, and following your plan, you can thwart the potential effect that these situations might have on your financial picture. Take precautions and accept that chaos and uncertainty is just the inherent nature of the market.

In the meantime, Good Luck on your journey to success...

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Futures Trading Methods - Are You A Scalper Or A Swing Trader?

Futures traders come in all flavors but it's basically a Neapolitan world. You can be a scalper, swing trader or a combination trader. Mindset and methodology generally determine in which sector of the futures trading world you'll thrive.

SCALPERS

Scalpers seek immediate gratification. They look for short-term market movements seeking to shave money off the bid/ask price spread. Holding each position for only a very short period of time (often 5-30 minutes) to minimize risk, scalpers make small gains through rapid trading.

Goals and factors scalpers seek to be most productive are:

1. Best money-making strategy: to realize a large gain by the end of the day from the accumulation of many small gains.

2. Most productive market environment: Wide-channel, heavy-volume, trending or oscillating markets.

3. In their trading tool box: 1- and 3-minute moving averages and oscillators such as stochastic charts.

SWING TRADERS

Swing traders are more dispassionate. Fundamentalists at heart, swing traders track price trends and patterns and other quantitative data looking for short-term price momentum. They act quickly to exploit such short-term price movements, looking for gains that can be made in one to four days. Swing traders sometimes mitigate risk by trading in smaller quantities.

Goals and factors swing traders seek to be most productive are:

1. Best money-making strategy: To gain from short-term changes in price movements that occur over one to four days.

2. Most productive market environment: Tight-channel, light-volume and trending markets.

3. In their trading tool box: 13- and 60-minute moving averages and stochastics charts.

The disadvantage is higher margins required to hold a contact overnight.

COMBINATION TRADERS

Quick reflexes and flexibility characterize combination traders. They are able to gauge the market and respond quickly to the existing environment, whether it's a snap decision or the more patient approach.

To become a successful futures trader, you have to figure out which trading style suits your personality and talents. If you're quick on your feet, have the ability to look at the indicators and make snap decisions, and can be satisfied with small wins, you could thrive as a scalper. If you prefer a more measured approach to trading, like to back your decisions up with data, and have the patience to wait for the right moment, swing trading could be your milieu. If you can live in both worlds, you're a combination trader. Each trading style has its advantages and can be quite profitable. The trick is to figure out in which environment YOU can be most profitable.

Fifty Percent Retracement

Fifty Percent Retracement - Overview
A large number of traders, especially day traders utilize fibonacci levels when trading. The most common fibonacci levels are 23.6%, 38.2%, 50%, 61.8% and 100%. These levels will often prove to be support or resistance, which provide the springboard for a security to continue in the direction of the primary trend. The fibonacci level that has received the most notoriety is the 61.8% retracement level. While there are a number of levels and fibonacci extensions known by professional traders, the fifty percent retracement level is known by virtually every trader. It is a natural trading intuition to buy a stock when it retraces half of its previous move. This basic trading principle is found in many trend following trading styles and it is also the staple of the Wyckoff trading method. This article will focus on long positions, but the same principles can be applied to shorting.

Identifying Reliable Fifty Percent Retracement Levels
Traders will often look for a fifty percent retracement of any move and think that it is a great buying opportunity. Well if it were this easy, every trader would be a millionaire. There are a number of factors that go into identifying when a fifty percent retracement level has better than average shot of providing the necessary support to keep the trend intact. Below are a few basic tenets for identifying such support.

Range of Recent Swing Points
The most recent swing high and swing lows must have a significant distance between them. This will ensure that you are not getting into a choppy trend, where price will penetrate any and every fibonacci level. This also provides you with a safety net that when the security resumes the primary trend, there is ample room between the 50% and 61.8% retracement levels. Also, even if the security is only able to double top, it will ensure a hefty gain.

Decreased Volume on test of Fifty Percent Retracement Level
When the security is pulling back to the fifty percent retracment level, the volume should begin to drop off. This implies that the selling pressure has subsided and that the primary trend is ready to resume. Many traders want to buy the test of the 61.8% retracement, but stocks that are able to hold their 50% retracement level are more bullish as the security had a smaller retracement.

Identify other Areas of Support
The 50% retracement level has even more significance when it coincides with another form of support. These forms of support can come in the form of trendlines, gaps, or previous resistance. The confluence of multiple support levels increases the odds that the security will resume its primary trend.

The Joy Of Trading!

Lee Iacocca, best known for his revival of the Chrysler Corporation in the 1980s, once said, "In times of great stress or adversity, it's always best to keep busy, to plow your anger and your energy into something positive." As a trader, you know that there are good days and bad days in the market. Sometimes you wake up and you are excited to start the day, trading plan in hand, and ready for the challenges ahead. Other days, you may be in a bad mood, for whatever reason, and feel upset or frustrated. When this happens, Iacocca is right on - turn your energy into something positive.

That something positive can be an appreciation of the complex, exciting markets themselves. Some might even call them beautiful. Yet, to truly recognize the value of the markets, you need to step back, take a deep breath, and look at the markets from the "outside in." Being a trader is one of the most enthralling jobs in the world! Where else do you plan, anticipate, and find solutions to problems - all day, every day? What other role requires the search for a winning financial strategy, often without a lot of time to think! Mostly, trading is a creative role. It truly is an art. No two traders approach their job and the markets the same. Your intuition leads the way, and by remaining open and perceptive, you will not only appreciate the market, but will excel in your job. .It's like finding the beauty in the beast!

Whether you are a waiter, teacher, or trader - when you are having a bad day, you are stuck in a "doing" mode - trying to be active but frustrated that you just cannot seem to get anything done. You are stuck, and without a focus on moving from "doing" to "being," you will not be able to break out of your bad mood. Is it time to give up? Not at all! Rather than feel the weight of your world on your shoulders, take a deep breath. Don't force yourself to trade. Instead, spend the time learning about how you become a better trader. Research how successful traders have become that way. Study the markets. Once you have focused your energy elsewhere, you will see that your creative juices will start flowing again. Then - and only then - begin trading again. It's a good bet that you're "doing" mode will be back on track. You'll see trading in a whole new light!

In the mean time, Good Luck on your journey to success...

OR if you would like to immensely improve your trading and investing results, check out

The Pros and Cons of Day Trading

It is not surprising why many are getting into the day trading business. Of course, money is the primary reason why people join the bandwagon. But like any other business, there are disadvantages as well. Here are some of the advantages and disadvantages of day trading.

The first advantage is being able to work at your own pace, on your own terms. No boss breathing down your neck, no snoopy co-workers, no company rules to follow. You don't need to drive yourself to the office, no dress code, no scheduled breaks, no unapproved leaves. More so, you can still earn even if you have already retired or unable to work.

You are the master of your own time. There is no fixed work schedule that you need to follow. You can go on vacation during off-season, and plan for an early retirement if you've earned enough for it. You don't need to work for 30 years before you can retire, and you may not work everyday. You have flexible work hours and working days. This gives you time to do other important things.

But because more people are into day trading, there are also many trading sites that abound. While others may be legitimate businesses, there are some which are not. Choose sites which can provide technical support and training to traders at a minimal rate.

There are also many brokers, good and bad, who'd offer their services to traders. Choose your broker well. Find one which offers low commission rates but provides maximum results. Experts and long-time traders can tell you which brokers are better than others.

Together with the possibility of success is the peril of failure. With this in mind, do not put all your savings in this business venture. Remember that in any transaction, as a person gains profits, another person loses money.

But just the same, if you are not strong enough to make decisions, you will never earn in this type of business. That is why it is important for you to be objective in the decisions that you make. Do not easily be discouraged if you experience losses. Every successful trader has experienced money loss at one time or another.

You can be financially successful with day trading. But as to any business venture that you wish to pursue, you must know it well enough before you start. And as you go along, learn a couple more things along the way.

Day Trading Mistakes, And How Not to Commit Them

There is no such thing as beginner's luck in day trading. While a few may have some lucky trading days, relying solely on it will not make you successful in the long run. Here are some common trading mistakes that beginners (and sometimes experts!) commit, and must therefore be avoided.

The first mistake that traders should not commit is to use all of his money for trading. This is something that no trader must do. In trading, use money that you can dispose of, not your lifetime savings or a student loan. Experts will tell you that "scared money" will never gain, maybe because of your own fears and anxieties as you go through trading with it.

So before you get hooked or even start day trading, make sure to set aside funds for payments that you need to make like rent, mortgage, and other loan payments. That way, in case you fail, you will not lose all your money and have to rely on welfare.

Another common mistake is to trade with one's emotions. Some traders love a specific stock so much that he doesn't let it go even when he should. This could result in more losses.

Because they trade with their emotions, they easily feel down and discouraged if they lose a few hundred. The following trading day, they let their disappointment interfere with their trading strategy, so they are bound by fear or uncertainty in their decisions.

Others, after a few gains, feel ecstatic and trade like hell. They start to make predictions, not based on studies or analysis but on how they want their investments to go. As a result, they lose more money than their actual profit. This is another common mistake for traders.

It is therefore important to stay neutral at all times. Be objective as you make choices. More importantly, stick to the plan that you made.

Another mistake is to use advanced software scanners. While this may be useful for an expert trader, it can pose problems for beginners, as they are difficult to operate and understand. Too much information can complicate things, so always remember to keep things simple while you are still starting.

People commit mistakes in order for them and for others to learn from them. Let these past mistakes serve as lessons for traders at present. Remember that these are only a few of them. There are other mistakes that can be made, so be careful in the choices that you make.

Maximize Your Day Trading Capital For Optimal Returns

"How much capital will I need to start day trading for a living?" This is a very common question that we often receive and it is somewhat difficult to answer. That is because each individual is different and has a different set of goals. Each person's standard of living could be different and what one individual makes with day trading for a living may not be enough for another. The more money you want or need to make will depend on the amount of capital that you have at risk.

Swing Trade for Percentage, Day Trade for Dollars

The answer is that it is different for each person and it is something you must consider for yourself before you start. We can only give some practical guidelines. I personally feel that you should have enough trading capital to purchase between 500 to 1000 shares of any given stock without having to use margin. When we take a swing trade position at StockTradersHQ, we look for gains in terms of percentage points. However, when I day trade, I am looking for dollars to take out of the market that day. I need a dollar figure because this is my salary for my work. It's how I make my living so I want to make a certain amount of dollars when I day trade.

The price of the stock I'm day trading is critical because when I day trade, I normally buy either 500 or 1000 shares, depending on the price of the stock. Ideally, my target when I take a day trade position is a $1.00 move on the stock. I will let the stock run much more than that if I see the momentum is going to carry it up further. I have had stocks move up 2, 3 4 dollars or more in a single day trade. If I get the move, I will run a trailing stop behind the price to lock in the profit should the stock reverse and fall back. I use the trailing stop because I want to take advantage of any more upside movement the stock might have the rest of the session. If I were to just sell at the $1.00 target, I am really robbing myself of possible further upside in the stock and limiting my potential profit. Remember, when you are trading 1000 shares at a time, you only need a small move in the stock for a worthwhile profit.

Keep Expectations Realistic

If you trade stocks in the $30 to $60 range, this could mean that you need a minimum of $30,000 to start. 1000 shares of a $30 stock or 500 shares of a $60 stock and so on. This of course would be 100% of your capital in any one position, which is very dangerous. If you want to trade 2 or 3 positions at a time, you would need $60K to $90K to start, assuming that you trade the 500 to 1000 share blocks in this $30 - $60 price range and you do not use your margin. If you are using margin, then you could buy more shares or pick higher priced stocks. If your day trading account balance was say $120,000, you could buy 2000 shares of a $20 stock and still have $80,000 left to put to work in 2 or 3 more trades. For example, if you had bought 2000 shares of SOLF on Friday (May 16th) at the opening price of $19.00 and sold at the close, you would have had a one day profit of $7,680. It closed at $22.84 for a $3.84 gain on your trade. $3.84 X 2000 = $7,680. This is just one example and it is not that far fetched to think that you can't catch these moves because every day there are stocks moving up and there is always a big mover in the market somewhere. We just happened to have had SOLF on our trade Bulletin and in the pre-market update as a stock to watch for a possible day trade.

In this example, we used 2000 shares but you do not need to trade that many shares. Trade what you feel is in your comfort level. Keep in mind, with lesser shares traded, you will need bigger daily moves in the stocks to make a decent living and there are times when stocks just do not move more than $1.00 in a day, especially when the market is suffering from a flat day. Just remember, if you are starting small, keep your expectations realistic. Certainly, someone trading with $30,000 to $50,000 is going to have a much more difficult time generating $1,000 per day than someone using $100,000 or more. Know your limitations with respect to your capital. Keep things in perspective and try not to expect miracles.

In the Big Leagues

When you get into the bigger leagues of day trading, you can then take on (purchase or short) a block or two of a stock, generally defined as 10,000 shares. You can trade 10K shares of a $5.00 stock for only a 10 cent move and you will have profited $1,000 in that trade. Examples of these types of stocks are CPST ($3.48) had a .15 range on Friday and FINL ($6.77) had a .30 range on Friday. You won't capture the whole move but you can see the potential if you get a decent entry. Remember; never put all your capital in one trade. Only use 25% to 33% of your available day trading capital in each trade.

This is going to require $150,000 to $200,000 or more of trading capital plus some use of margin in limited situations and for a limited time. When you reach this level, it is easy to see how day trading can become quite profitable but also quite risky. A move of a few pennies across 10,000 shares can return quite a bit of money, quite rapidly if you scalp 3 or 4 trades a day in the stock. Just remember it goes both ways; you can quickly lose quite a bit as well. There is no right or wrong answer with regard to how much you need to start. Simply keep your objectives in perspective and be realistic based on the capital in play.

Copyright 2008 StockTradersHQ.com

Online Trading Beginners - One Secret The Pros Use Every Day

Online Trading is an amazing way to create a stream of profits in addition to your day job. It is fun, easy to get started in and is accessible to anyone with an Internet connection. For beginners just getting started with online trading, here is a common practice of experienced traders that you must use in order to be successful in the long-term.

Use a Stop-Loss Order!

This is mandatory. At the time you place your buy order, you should ALWAYS, ALWAYS place a Stop-Loss order along with it. Think of it as the online trader's version of the buddy system. You need to go into your stock purchase with a buddy in case something goes wrong.

A Stop-Loss is a sell order for the same amount of shares that you are buying. You will place that order with a sale price that is lower than what you are buying the stock for. So if your dream stock starts dropping down to where you set your Stop-Loss order, it will automatically sell your entire position.

For beginning online traders, it is important to use a Stop-Loss because usually you can't watch the market at all times. There is nothing worse than coming home from work, logging on to your online account and seeing that you have taken a huge loss.

It is also important at times when you are watching the market. If your stock starts dropping, panic sets in and now you are in a battle with your emotions. "Should I sell now, or see what it does next?" Or "I am sure this stock is going to rebound soon." If you set your Stop-Loss at the time you buy, you can make a more rational decision about where to set the sell price.

Just where to set the price on a Stop-Loss is subject to debate. Unfortunately, it all depends on the stock you are investing in and your style. For penny stocks and other small caps that fluctuate a lot, your Stop-Loss will be lower on a percentage basis than with a blue-chip stock. The bottom line is that you should set the Stop-Loss at whatever you are willing to lose.

A Stop-Loss is your buddy. Take it with you on every single trade. It is better to take a controlled loss and move on than to take a huge loss that you will regret.

The Real Secret To Profitable Trading

What is the key to forex trading education that will turn even average forex systems into winners every time?This is nothing magical or secret and you have probably heard it all before, but it is the most important part of forex trading.

In fact it is so important that if you only understand and apply this one thing correctly, you will be successful in the currency markets.

A very wealthy trader once said that he can flip a coin to enter the market, and he still will have trading success.

It is all because of his risk management strategy.

Even if only 50% of your trades are a profitable trade you should still make money.It does not matter if you rely on forex forecasts,auto forex trading or the best system trading, if you do not know what you are doing on the risk management side you will never join profitable traders.

Here are the Golden Money Management Rules you should stick to if you want to ever profit trading:

• Always use a stop loss. Trading without a stop loss are either for the very brave or very stupid, and I tend to favor the last one. Do not place your stop loss at any level.
• Your stop loss should be at a logical point where you know your trade is wrong if price violates that level. The best places are normally just above resistance levels or below support levels..
• You should never risk more than 2% of your entire account on any one trade. This means that if you have a couple of losses in a row you can still trade afterwards.
• If you see your stop loss is too far away, and you will be risking more than 2% on the trade then pass on it. If you want to gamble then go to the casino!
• When doing your forex analysis, your risk reward ratio should be 2 to 1 or greater. This means that if your stop loss is 20 pips then your profit margin should be 40 pips or more. By doing this a traders profit is maximized, while keeping losses to a minimum.
• By all means-if your account is not at least $10 000 then open a mini forex account.
• Mini accounts gives you far more options in controlling risk than a regular account. Trading a regular forex trading account with 100:1 leverage with a small balance is trading suicide-one mistake and your trading live is over!

If you stick to these simple rules your trading can be more profitable than you could have thought possible,

How To Make Money Day Trading

Day trading sounds like a fun job, doesn't it? You get to stay home and make money simply by sitting in front of a computer in your pajamas. All you have to do is log onto the Internet and buy, check up on, and sell stocks for a couple of hours a day. You can even automate your buys and sells and have a daily report of your stock activity e-mailed to you. If you know what you're doing you can make tons of easy money.

Or is that wishful thinking? Can it really be that easy?

The truth is that it is not as easy as it sounds. You still have to invest your time researching stocks. You still have a degree of risk. You still have to account for trading fees in your profitability calculations. You still have to have money to make money.

Computers and the Internet make day trading a lot more automated and a lot more efficient. And that includes the research aspect of day trading. Gone are the days when you would have to spend countless hours researching among hundreds of stocks to identify the best ones worth investing in.

Now, with the tools and technology that are available to us at our disposal, we can cut our research time hundredfold, and we can make much more sound investment decisions, because our research will be based on mathematical number crunching, data analysis, and precision-based statistical probability.

Computers can extrapolate the future behavior of stock trends based on past performance with a surprising degree of precision and accuracy.

Day Trading - Trade, Don't Gamble

There is one thing in common among winners and losers in any gambling game- they will continue to gamble regardless of what happens. And what are the commonalities between gambling and day trading? Simple, there are losers and winners, most of them are gamblers.

Despite the fact that gambling and trading are two very different things; many traders seem to behave as gamblers instead of day traders. In gambling the winner would like to believe that he has an unstoppable streak of good luck and will try to ride his momentum until he gives all his winnings back to the casino. The loser, on the other hand, will try to get out of their bad luck by risking all his money in belief that he will be able to win back all the money he's lost. In trading unsuccessful traders work in this manner.

True trading is not like gambling though. Unfortunately, most traders who have not reached maturity tend to act in this manner and over trade for the same objective as a gambler.

Theoretically, day traders should be able to get over the practices of a gambler. He must try to evolve from this point until he becomes a strategist. This can only be achieved though through developing the necessary skills, the discriminatory attitude and the realization that the market moves in a certain way and this way should be discovered.

There are no secrets to day trading though. Everyone should realize that the behavior of the market is a bit predictable by using indicators and patterns which have existed before. Everyone should also recognize the truth that the market works in a psychological way and one must only develop keenness to this reality. Also, everyone should acknowledge that skills take time to develop and once they start to build-up, the trader will also start to become more efficient in the trade.

Over-trading does not work in this business. Those who practice this technique either have no sufficient knowledge in this field or have not out grown the common attitudes of the amateurs which depend highly on their priorities.

The most common reasons why amateurs over trade are a) they trade to confirm that they are good and that their system works, b) they are stretching their limits to prove that they can make profits whenever possible, c) they try to get off with the emotional burden especially when they are losing their trade by selling or re-entering the market if the signs are good enough for them, and d) just like the gambler they only want to take advantage of their luck to win back their losses.

How To Pick Stocks To Invest In

With all of the hundreds of thousands of stocks available on the market for us to choose from, how do you know which stocks to invest in? Should you pick a stock because it is in an industry that is of interest to you? Should you let your emotions drive your stock picks?

What if the hottest stock pick on the market is in an industry that you know next to nothing about? Would you still invest in it, knowing that it has an extremely high probability of doubling value?

Conversely, would you be loyal to stocks in your favorite industry even if the stocks weren't doing to well, on the hope that one way the market might be kind to your stocks and they will increase in value?

Often times, people invest in a stock simply because "everybody else is". What impact does this stock saturation have on the stocks value?

Now, would you trust a computer to pick your stocks for you? There are computer programs out there whose sole purpose is to analyze stocks and issue stock recommendations. They can analyze hundreds of thousands of stock and perform millions of calculations per second against millions of data points. Based on their calculations, they can make forecasts about a stock's future performance, by extrapolating past trends and making projections about the future.

Of course, nobody can predict the future. Not a computer. Not a human being. But a computer can do one thing that human beings cannot. They can process millions of calculations per second with absolutely accuracy and precision and make extremely accurate predictions about the future based on the mathematical laws of statistical probability. One thing they cannot do is account for all of the socio-political factors that drive world events that cause the fluctuations in the market that we experience every day.

What It Takes To Be A Day Trading Expert

Day trading is one of the more popular businesses in today's market. We've seen people whose lives have improved in just a couple of weeks or months all because of it. But on the same note, we've also heard of people who've lost thousands of dollars in one day. The key, therefore, is to be an expert day trader. But how does one become one?

First, you must learn the tricks of the trade. This is possible if you provide yourself with all the relevant information on this topic.

There are some companies which conduct seminars and trainings. Here they teach you financial market analysis, trends and reports that are vital for this business. For most successful traders, this is the first step.

Listen to experts as they talk on their experiences and insights, and learn from them. Read books and articles about it. Talk to a professional trader or broker. Through casual conversations, you are able to pick up some practical information about the topic.

While it is advisable to learn from them, it is not good to copy the investments of others. The thing with day trading is its unpredictability. What might have worked today may not yield the same results tomorrow.

Online trading websites are also good sources of information. They can provide you with updates and new trends which were not taught in seminars or courses that you've attended. Here you can also talk to other traders and learn some tips also.

To be an expert trader, you must prepare yourself emotionally as well. You must be strong-willed and disciplined. It is normal to experience losses, but this should not stop you from moving on.

On the average, it is suggested that a new day trader must have at least $50,000 to invest, but there are others who started with a lot less. Whatever the amount is, it is important that you keep a portion of your funds as savings or for emergency cases.

Day trading, as they say, is not for the weak-hearted. In trading, you use your brain and not your emotions. But the only way for you to make sound, wise choices is if you are knowledgeable on the topic. That is why preparation and education is very important. Sadly, expert traders do not develop overnight. And even if you've had training, it is not a fool-proof guarantee to success.

Common Fatal Mistakes in Day Trading - Part 2

Here are four mistakes that traders usually find themselves doing concerning day trading. These are not easy to avoid without enough experience so be sure to learn from each experience as much as you can.

Bad timing

The majority of traders acknowledge the need for certainty. They always want to be sure that they are entering a winning trade. Theoretically, everyone can profit from any trade. The difference lies on "when" they decide to enter. Some people wait too long, some impulsively gets in too early. There should be a good mixture of timing and necessary indicators to help you spot the trade that will give you the money.

In most cases, traders let the trades take off without them. But they need to wait until they become very certain of what to do. Some hop in before the trade sells off. Just like the game of musical chairs, someone will always be left without a chair to sit in.

Being too hopeful

Trading is a game of probability, of numbers, of technicalities, but definitely not a game of hopes and wishes. The market moves in a certain direction ignoring the number of people who are hoping and praying that the stocks they are trading will go up. The market does not care whether you are losing or winning, it is in fact neutral. Being too hopeful is an indication of losing. So sell your stocks before you go broke. Afterwards, asses your pitfalls and try not to commit the same mistakes again.

Deviating from a working plan

It is a general rule in trading that you should stick to two or three working plans. However, in the heat of excitement or the height of panicking, traders often forget that they are using a strategy that has specific objectives, direction and fall-backs. Some traders begin their trade with a specific methodology in mind but after several days of working on a set of specific rules to follow, they begin to use methods that are entirely different.

It is not wrong to invent or innovate but if it is money that's on the line, you should always be certain that the new method won't backfire. Nonetheless, this is often the case because in this business no one can be sure that a method is successful or not unless practiced overtime.

Unrelenting ego

Traders who are highly successful in other businesses enter day trading with one thing in mind- they have been a success in other things, why should this be any different? This kind of attitude boils down to one thing- ego or the bane of overconfidence.

Disadvantages of Day Trading

While day trading offers a lucrative opportunity, it still has some inherent disadvantages that are hard to get over for many people. Here are some of them:

Loss of money

The trade is very lucrative but is also very dangerous. Many traders walk out at the end of the day with a depleted account which would not even pass as a paycheck. Depending on the decisions one makes during trading, a person could lose several hundreds to thousands of dollars

Improper money management

Because this trade revolves around money, and the money invested here could be lost at any time of the day, a trader then faces the risk of spending the money he could not afford to lose. He might find the need to borrow money from lenders or use his money intended for bills as funds for trading.

Demanding Job

Day trading is not a laid-back type of job. You have to dedicate a certain time of your day to it with full focus depending on the income you want to achieve. Also, it is a highly stressful job which demands you always make make-or-break decisions while being time pressured. For people who find it hard to focus for lengthy period, they may find this trade a bit frustrating especially when very little is actually happening.

Huge stressors

Being a trader requires you to endure huge daily stressors, not only on the perspective of possible money losses, but also because the job will require you to give all your focus on what's happening in the markets that could affect your trades. You will also have to constantly watch the fluctuations in the prices and the market plus the indicators that will help you decide where to put your next trade.

Overnight Gaps

Trading ends as the day closes so any market activities overnight won't affect you in anyway- even if sometimes it could be advantageous on your part.

A moving market is not a guarantee

Sometimes, the market is so active but you'll end up with a loss or a breakeven. This could be attributed to wrong decisions on what shares to buy or to sell or wrong timing in entering the trade.

Overtrading

Overtrading - is defined as either taking too many opportunities or trading too large shares - is very prevalent in day trading. Amateurs and emotional trades find it hard not to overtrade which puts them at a lot more risks than necessary.

Put Options and Power Ratings - Investing, Even in A Falling Market

With all the talk about recessions, a mortgage crisis, a stressed credit market, and the falling value of the dollar in the United States it would appear that the stock market is definitely a place to avoid putting your money. While this may be generally true in the short run for the market as a whole, in the long run things will even out. But if you are the type that cannot wait that long there are other avenues you may take to invest profitably such as put options or short term trading.

As confusing as it may first sound, it is possible to make an investment where you profit from a drop in the price of the stock. This investment is called the put option. With a put option you pay a premium so you will have the right, but not the obligation, to sell a stock at a certain price within a specific time for the price the stock was at the time you made the deal. The following example will explain.

If stock XYZ is currently at $50 per share you can pay for the right to sell that stock (usually in lots of 100) to a buyer for $50 no matter what the price is in the future. If the price of the stock becomes $45 you can exercise your option, purchase the shares of XYZ for $45 and then sell them for $50 to complete the option. Your profit on that deal is then ($50 x 100 - $45 x 100 - premium paid).

If waiting for stocks to fall is not your option you can always try to find that diamond in the ruff that will be bouncing back up in price. An important thing to remember about stocks is that the lower they drop in price, the more likely they are to rise in price in the future. Forbes has taken this idea and perfected it, creating the Short Term Power Ratings. When a stock reaches a rating of 8 or above (on a 10 point scale made by Forbes) they have found that the average 5 day return on investment outperforms the average stock by an 8 to 1 margin.

Even amidst all the negative speculation or a bear's market you can still find ways to make money investing. Remember to learn and then stick to what you know. Keep investing.

Day Trading Systems, Do They Work?

Day trading is risky business. But like any other form of business, there are ways to prevent losses. One of them is by having a definite trading plan. And in order to have a definite plan, you need to know trading systems and how they operate.

The first question that comes to mind is: what are trading systems? These are sets of rules that affect the way one trades. These systems have been tested and proven for many years, making it an effective tool in making day trading choices. If you use the systematic approach, decisions are based not on your gut or discretion but on the system itself.

What benefits does the use of trading system have? For one, it is something that can be measured. Unlike discretionary systems which cannot be quantified, the rules for this system are rather clear and well-defined.

Also, trading systems, when used properly, can help minimize losses. For as long as you follow the plan by heart, losses can be eliminated.

With the systematic approach, you are also able to control emotions that may seriously affect the way you trade. Because you rely on the system and not on your heart or emotions, decisions are more likely to be logical and sound than when you use your own judgment.

Use of this system also gives you peace of mind, which is not possible if you are using the discretionary approach. Because the system has been tried and tested in the past, then, chances are it will still work at present. And since it has been proven to make money before, then most likely you will also earn money now if you use the same system.

Because the system does the thinking for you, you now have more time to do other things than to think of strategies or plans on every transactions made. Use of trading systems may seem boring because it takes out the mind-challenging aspect of trading, but on the other hand you can now do things other than trade.

However, one setback of these trading systems is the unreliability of data. While these systems may provide us with in-depth information on market trends and the like, how the system came up with such figures may be questionable. Nonetheless, there are more advantages for systematic trading compared to discretionary trading, making it a more effective tool in day trading.

Can You Actually Earn By Day Trading?

This is a common question to those who have no idea what day trading is, or those who may have heard of the topic but have not actually tried it. Experts and those who have actually benefited from this type of business are sure to answer in the affirmative, while those who have suffered losses are quick to say no. So in order to arrive at a sensible answer, we need to understand how it works and how traders can profit from it.

This type of trading involves the typical buy and sell of stocks and other securities, with the distinguishing feature of having both transactions done in one trading day. While this may seem simple for those who are also into investments and the stock market, you can't use mere judgment or discretion in your decisions. That is why experts would advise would-be traders to learn the subject well before actually getting involved.

Before you start trading, you need to make an account with online trading companies. Once you've made an account, you will then hire a broker to make the deals. These brokers and trading companies charge commissions, slippage fees and other trading fees for transactions made. These rates differ for each person and company, so you must choose those which do not charge very high amounts.

One common mistake by traders is to use all their money. This should not be the case. Use only disposable money. Money for food, bills payments or tuition should never be used in trading. Otherwise, it will put unwanted pressure on you not to lose it as you trade.

Once you've learned a system and decided to use it, the next step is to be consistent in your transactions. To achieve consistency, make sure that the system is documented. Once you've written it down, you will then measure its critical factors. Look into the aspects which affect profitability. Once you've identified these aspects, then you can make the necessary changes in your system.

Day trading can be profitable, if you know the business well. People who have failed in this venture are often those who did not take time to learn the ropes. For you to earn in day trading, the goal is to keep your losses and trading costs at a minimum. With this simple principle in mind, you will then develop your own trading system, and do things according to it.

Day Trading - How Does it Work?

Day trading is the process of buying and selling securities within one trading day. Unlike other forms of trading like stocks and other securities, trading is faster. While others think of it as a form of gambling because of the high risks involved, others see it as a profitable business option. That is why there are more people getting into it, leaving their day jobs just so they can focus on this venture.

For new traders, it is best to know the ins and outs of the system. Consider this as a new business venture. Know what it's all about. If you must, enroll in a short course or take some seminars on the topic. Read books, articles or website information that you can download.

Some websites also have simulated trading that you can try and practice. This is similar to actual trading, except that there is no real money involved. Once you think you've learned enough, you are now ready for actual trading.

Trading is made through trading sites or online trading companies. If you have a fast internet connection at home, and some good software, then you can do trading right in your own home. But most traders go to trading companies where they can access the market data, and pay them with commissions from their profits.

Through a trading company, you are able to purchase stocks, currencies or futures. These companies have online brokers which do the transaction for you, for a certain fee. The goal is to find the best trading company for you. They provide different services and different rates, so weigh all options before deciding on which company to join.

The first step in actual trading is to open an account with these companies. You may start with a relatively small amount, and work from there. Or you may start big. Whatever amount you decide, make sure that you don't invest all your savings. Set aside a portion of the amount for bills payment or emergencies.

After opening an account, you are now ready to choose an online broker to do transactions on your behalf but still under your instructions. Companies have several online brokers, so choose one whom you think can work to your advantage. Once you've done these, then you're all set!

Day trading can work for you, as it has for many others. But keep in mind that every gain is another person's loss. So be careful in the choices and decisions that you make.