Day Trading Talk

Kelly Price asked:


If you are a forex day trader or considering it, then you need to know the above facts, if you do they will save you a lot of money. Forex day trading is more popular than ever but how do you make profits? Let’s find out.

If you look online you will find more forex day trading courses than any other type of trading methodology and they will all lose you money here’s why:

Let’s start first of all with the vendors who sell courses

1. Why are they selling them?

To make money for themselves! They don’t normally trade their day trading systems because they know they don’t work.

If these systems could produce regular profits they would be to busy making money for themselves and not have the time to bother you for a few hundred dollars they would be to busy making money.

2. The Evidence That day trading doesn’t work

If you ask for a track record of profits from any of these vendors you won’t get one – What you will normally get is a hypothetical track record of huge gains but this is done in hindsight – KNOWING the closing prices.

If I knew tomorrow’s price today, I would be a multi millionaire but of course forex trading is a bit more difficult – you have to work out where prices are going without knowing them in advance!

These vendors use great advertising copy to dupe people but the logic of day trading simply doesn’t work. Why? Because:

3. All short term volatility is random!

Day traders will claim that it’s not – but of course it is!

Volatility can and does, take prices anywhere in a day and daily support and resistance levels are meaningless. When day traders lose, they blame the system or the indicators they use, however if volatility is random, then it is of course the logic of day trading that is at fault – NOT the indicators.

If you think that you can make money day trading go ahead and try but you will learn a very expensive lesson and lose.

I would love a day trader to prove me wrong and produce a real time track record of gains over the longer term (3 years or more), but have the feeling I will be waiting for a long time.

The belief that you can make money day trading, is one of the biggest myths of forex trading and despite the evidence it doesn’t work, traders still think they can win at it – they can’t.



Joel

Mika Hamilton asked:


The rewards are incredible for those that do it right, but for those who make enough mistakes it will take everything they have and still not be satisfied. Day trading is the practice of buying and selling securities and other financial options. These transactions are usually completed within the same day. Options that are typically traded include stocks, stock options and currencies. For the most part, day traders focus only on short term trading and can consist of several trades in a single day. Because of the high volume in trades day traders are given large discounts through trading brokerages.

Day trading gained momentum and notoriety during the “Tech Bubble” a period of bull market activity from 1997-2000. During this time even the most inexperienced and casual of traders were making large profits. Usually a day trader would have a certain amount of money and would basically borrow the rest on margin. During this time most day traders didn’t even find it necessary to have a solid strategy. “Buy in the morning and sell in the afternoon” was the basic game plan for many. Reality hit the market in March of 2000. Since most the day traders at the time were inexperienced, they began to lose large sums of money quicker then it was gained. Most of the people relying on day trading as a source of income ended up completely broke and in some cases destitute.

Day trading is so risky that it has been likened to gambling. Compared to the number of day traders, very few are able to make consistent profits. The primary factor that contributes to such high risk is that the funds to trade are borrowed on margin. Due to this fact money management skills are a necessity. An experienced day trader knows that sometimes they can’t afford to wait for the stock to rise again, if the market fails to meet the expectations, quick thinking is needed in order to avoid higher losses. A very small percentage of those who consider themselves day traders ever actually see a profit.

The US Securities and Exchange Commission (SEC) advises against day trading due to the fact that most individuals do not have the wealth or ability to not only make money, but to also survive the losses that most traders will face. Day Trading is not the same as investing, an inexperienced person may look at the processes and feel that it is just short term investing, but that is an incorrect view and is a leading cause of failure in day trading. Despite the promises of quick and “easy” money, day trading is a very stressful job. It requires dedication and doesn’t allow for a moments rest when trading. In this field a few seconds can make all the difference. Borrowing money to buy stocks is not recommended. Persons truly interested in risky investment should do so under the guidance and assistance of trained professionals. The risk should be spread out so as to minimize losses.



Norman

Terry Leslie asked:


What impact your mind frame has on your day trading activities will in part be determined by how emotionally tuned you are. In some cases, if you happen to blow with your emotions, your day will be heavily affected by other things in your life, frustration, or a few bad trades. In other cases, you may have a high tolerance for emotional strife before you believe it affects your daily dealings. In either case, the mind frame you enter the day with counts.

Because day trading is a solo activity, only you get to determine how your day goes and how you handle the events of the day. Because of this solo activity, you may also need to develop a higher level of self awareness. Your mood can become your monkey on your back even during a good trading day. If you allow a downcast mood to factor into your decisions, you are no longer making objective decisions. Using emotion through the trading day is a definite sign of potential loss. Being objective helps you make objective decisions and the introduction of emotion into that equation is a good recipe for loss.

On top of the unexpected emotional ups and downs of every day life, you also need to take into account the typical rhythm that your body goes through. Some people are morning people with clarity of mind and others just don’t perk up until later in the day. Know yourself, and your own natural biorhythms, and you will be more readily capable of determining the best time to lay out your plan for the following day. In some cases, you are going to need to learn to trust your clear conceptualizing because when you go to execute your trades, your mental cloudiness may want to over rule the clearly thought out plan.

If you are a morning person with the wind at your back all the way until noon, use that time wisely. During your natural down time, rely on your good judgment from the morning. If you are a natural night owl, use your morning to execute trades that were well thought during your peak times the day before, again trusting your earlier clarity. This is a process that takes some traders a couple of years to really get down. They allow their own poor judgment of their fatigued time to get in the way of what was otherwise a perfectly awesome plan.

Developing self discipline is a necessity. Learn everything you can about yourself, the way you make certain decisions at certain times of the day, and learn to trust your most clearly thought out plans. Some traders keep a notebook beside them and note their mood and their overall energy level as they make decisions, and then they go back and keep track of the quality of those decisions to help figure out what time of the day they make the clearest and most profitable decisions.

This requires a dedication and a time commitment, but those who have successfully tracked themselves are successfully happier with their results from this exercise. Should you choose to follow the exercise, you can not pick and choose which decisions you keep track of. You must keep account of every single one and the shortest amount of time that is recommended is two weeks, with most people finding the best results between one and three months.

Well defined plans are vital to creating wealth over time and executing intelligent and profitable trades. Defining those plans during the times of the day when you are most apt to make the best decisions is only logical. Creating an environment that is healthy enough to allow you to leave your emotional issues at the door when you sit down to trade is also a vital part of keeping a clear trading head and trading without emotional involvement. These are easier said than done, but just like everything else, with practice comes better.



ARDEN Roger

stapin asked:


It is difficult yet lucrative endeavor to become a successful day trader. To become a successful stock trader you need to commit more time and be more dedicated than a general investor because day trading is a business where competition is fierce among a large number of market wizards which makes investing in the market equally risky. Amateur participants formulate certain trading rules and adhere to them to escape the risk. It should be remember that assurances of big amounts follow the adherence of day trading rules by the amateur or any trader.

Similar to gambling, day trading also follows plenty of action to recognize quick profits or painful losses in that event. Certain trading rules helps you to learn the tricks of successful trading, helps you to survive even in the days of odds and how to cope up those situation. To be a successful stock trader, one must have patience, timing, money and must keep themselves adhere to the trading discipline. As losses in trading are so hurtful and can be unnerving to such a level that it might provoke the trader to breach the trading discipline rapidly. They turn irrational, and make more losses pursuing after them. Fear, hope and greed are evils of trading that must be strictly avoided by any trader and especially the amateur. Timing plays an important role in the world of day trading because most trades are for making quick money. Such quick money making trade are also vulnerable to loss and there requires patience in highest level. Enough experience is required which can only be gained over a period of years of practicing to learn the red signals, spot the course and time the trade all of which are required in timing a stock. Therefore trader especially the amateur should take care that timing and patience is very important when trading and one can earn a substantial sum adhering to these general principles of trading.

Lastly, it has been concluded after comparing to all logistical concerns that the approach to financial backing tends to have the most significant consequence as it sets the pitch for the trading activity and may have accepting on the final result. Therefore it is essential that a trader must have enough capital to be independent. Financial backing should be minimum to absorb expected trading losses keeping in mind that everyday living expenses do not ever get dependent on the outcome of a trade.



Frances