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.
First: Avoid over trading. Most of the time the market is a random walk - meaning that it is moving up and down without any predictable pattern. This is caused by retail traders taking small positions in the market, and often exiting quickly.
These retail traders don't affect the long-term moves of the market. It's the pros, with their large volume and their willingness to hold positions longer, who create sustainable moves in the market that can result in significant profits.
Many people are drawn to day trading because of the excitement of the business and the potential for big, fast profits. This attitude sets up the trader for failure. Day trading does not have the frantic energy of a video game. Most successful day traders sit by the sidelines for long periods of time simply waiting for a high-probability setup to occur. The pros trade much less frequently than the amateurs think.
Second: The common axiom "The trend is your friend" is a half-truth.
It's more accurate to say that the trend is a fair weather friend!
It is your friend early on. But trends get run out of steam.
There's two times when you can put the numbers in your favor:
Early in a new trend.
When a trend is getting "tired."
Trading at these two times lets you put the "edge" of the bell curve on your side. Trading mid-trend, puts you in the middle of the bell curve where the outcome is completely unpredictable.
Third: Participate in chat rooms for day trading tips and do the opposite!
The biggest benefit usually doesn't come from listening to the room leader. It often comes observing the chatter of the participants while they comment on what trades they are getting into.
As you may guess, the majority of the time they are completely misguided in their approach.
They reveal the mind of the unprofitable retail traders. It's almost eerie how the amateurs think alike when it comes to trading the markets. If you listen to them long enough in the trading rooms you'll start to notice the patterns of the things they do consistently. Do the opposite and win.
One of the most common things I've noticed traders do in these chat rooms is trading against the trend. It's almost a mantra as they say: "The market can't go any higher." "The market has to turn around here." "This market is 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 extremely rewarding, but to be successful you must stand aside from the masses and avoid the herd instinct that drives so many. These 3 day trading tips can help you be among the minority who succeeds.
About the Author:
Dr. Barry Burns is the president of Top Dog Trading, writes a day trading blog and offers a free 5-day video course which offers day trading tips. He has addressed DayTradersUSA, "Elite Masters of Trading," and Traders Expos.
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