Day Trading Tips To Turn Amateurs Into Pros
Day trading can be an enjoyable way to make money. But it's not as easy as most people think. Here are some day trading tips that can aid the beginner and the more experienced trader to help you reach your goals faster.
Tip #1: Do not over trade.
The market is a random walk most of the time, meaning that it's moving around without a pattern that can forecasted. Retail traders taking small positions in the market cause this meaningless movement.
These amateurs do not affect the long-term movement of the market. The professionals, with their large volume and their willingness to hold positions longer, are the ones who create sustainable moves in the market that can provide meaningful profits.
Many traders are lured to day trading because of the energy of the business and
the potential for big profits. This mindset is not helpful. The pros keep their
powder dry for long periods of time waiting for a high-probability situation
to happen. They are much less active than beginners think.
Second: The trend is your friend ... sometimes.
The trend is a fair weather friend!
It's true that the trend is your friend early on. But trends get exhausted and end. It's more accurate to say: "The trend is your friend, until the end."
There are 2 times to trade when you can put stats on your side:
- At the very beginning of a trend.
- Late in an old trend.
Trading only at these 2 times allows you to put the statistics of the "edge" of
the bell curve on your side. Trading in the middle of a trend, puts you solidly
in the middle of the bell curve where anything can happen.
Third: Join free trading rooms for day trading tips but do exactly the opposite of what you hear!
I've participated in many chat rooms over the years, and have received a tremendous benefit from them. But the benefit did not come from listening to the teacher. It came from watching the comments of the participants as they shared what they were doing at any given time in the market.
As you may guess, the majority of the time they are completely misguided in their approach.
They represent the collective voice of the unprofitable masses. It's uncanny how all the amateurs think alike when it comes to analyzing the markets. If you follow them in the chat rooms long enough you'll pick up on the patterns of the things they do wrong over and over. Then you'll learn to do the opposite and win.
One of the most typical errors I find people do in the rooms is trade against the trend. You hear the same comments over and over: "This market can't go any higher now for sure." "It definitely has to turn around here now." "OK, the market is now way over-extended."
It's uncanny how the retail traders as a group, seem to be determined to find tops and bottoms. For some reason they have a hard time trading with the trend and seem obsessed with trading against it. Of course this can spell big money for you. Once you know what the amateurs are doing, you can make money be trading against them.
Day trading can be enjoyable and financially beneficial. To be a success, however, you must avoid the herd and stand apart from the masses who lose their money. Employ these 3 day trading tips to put you squarely on the path to profitability.
Dr. Barry Burns is the president of Top Dog Trading, maintains a (http://www.TopDogTrading.com) day trading blog and offers a free 5-day video course which offers (http://www.TopDogTrading.com/day_trading_tips.html) day trading tips. He has spoken to DayWealthUSA, "Elite Masters of Trading," and Wealth Expos.
Comments
This article hasn't been commented yet.
Write a comment
* = required field