Day Trading: How to Make Money in the Stock Market
Day trading
- Trading is a very popular investment technique. With the power of the
internet, it is now possible for the average person to open an account
with a broker and start trading. There are two main ways of trading:
long term and short term. Short term trades are entered and closed on
the same day and this is called intraday or day trading. This basically
means trading that is done the same day. Some of these trades last for
minutes or hours at a time.The most popular day trading technique is
known as scalping. The scalper is an individual who makes dozens or
hundreds of trades per day, trying to "scalp" a small profit from each
trade by exploiting the bid-ask spread. Stock market - In order to do this successfully, it is necessary
to recognize and understand the current trend. There is always a trend
in trading, one just has to to be able to identify it. Once its
identified, use it to the full benefit. The best times to trade would be
when the market is making a move in a specific direction, either up or
down, as confirmed by technical indicators and most importantly price.
It is also critical to have a volume indicator to confirm a move in
either direction. There are a number of ways to identify the start of a price move.
A very powerful signal is the breakout - when a stock moves out of a
range and starts climbing or falling, along with increasing volume. This
shows that there is a buying or selling frenzy going on and is the best
time to jump in. The hardest part of day trading is knowing when to exit a trade,
whether it is at a loss or a profit. As a result, strict rules need to
be set in advance of the trading day so that decisions are taken based
on a preset plan rather than emotions. This mechanical way of trading
will ensure long term profitability as in the heat of a trading day,
decisions based on emotions can lead to huge losses which are
unsustainable. A timeless wisdom in trading applies, which is to cut losses
short and let profits run. This is not always easy to do, hence the need
for a plan set out before the start of each trading day, to be followed
religiously once trading is underway. It is important to trade by
facts, not just feelings or greed. What is seen should be the
determination of whether to trade or not. Lastly, among the best intraday trading strategy, is to be sure
to start the next day fresh. The previous days' trades and any
activities should not carry over to the next day. Be sure to close any
and all positions by the end of the day, each day. Again, it is not good
practice to have the positions open when a new days starts. Intraday
traders should practice these techniques to ensure a good outcome. To learn more about trading and how to do it successfully with long term profitability, download my ebook The Truth About Trading at http://www.amazon.com/The-Truth-About-Trading-ebook/dp/B007IVQMDI/ |