Jimmy




The reality is, day trading is for the minority – not the majority. Recent statistics pooled together from the largest street brokers (non-professional institutions) suggest that just under 97% of all beginner traders fail. And so the odds are not in your favor to begin with. Nevertheless, you may also be aware that day trading can indeed be very remunerative – providing you develop the right characteristics you can become very profitable very rapidly.

So what precisely separates the successful three percent from the rest of the crowd? In one word – experience.

Learning the intricacies of day trading can be an extremely rewarding endeavour. Speaking from personal experience, building up the knowledge needed to be able to navigate the money markets has been the most rewarding challenges I have ever set upon. No doubt, if you truly knew how much information you were required to digest, you would probably turn away; but let me reiterate, with the right mindset, day trading can become an extremely profitable and rewarding vocation.

In order to assist you on your learning curve many guides, instructional videos and personal tutors ready to help you digest this new and fascinating world of the transnational money markets. One particular book that both I and lots of other day traders have found valuable is a book names “Tools and Tactics for the Master DayTrader,” written by Oliver Velez. Depending on the level of risk of your trading strategy, you may wish to trade either intraday, swing or positionally – this guide goes through all of these styles of trading giving specific charting and numerical cases.

When beginning intraday trading, you will come across two styles of trading – fundamental and technical. As a day trader, technical analysis should be your best friend. Technical analysis entails looking at historic price data to derive future price movements. The worlds most prosperous day traders owe their success down to truly understanding technical analysis to the letter – if you want to become successful this will be a topic you will have to to devote much time to mastering. The above mentioned book will help you learn this.

Equally as pivotal as technical analysis is cash management. Obviously a trader will enter the financial markets in order to make a good profit, so a good payroll management scheme processed for intraday trading is clearly necessary. At this point it is wise to reference stop losses, and what a huge part of your intraday trading arsenal they should become. To illustrate if you only risk 4% of money you’ve put aside to trade on each position you take, and you only make a winning trade half of the time, after approximately only 4 positionsyou’ll be in profit.

If at all possible, I would encourage all budding day traders to partner up with other traders. Finding a mentor will both enhance your understanding of money markets, and also quicken your learning process greatly. There are many trading exhibitions around the world – take the chance, attend them and meet like minded traders. Maybe one day you’ll be the one mentoring other newbie traders. All in all, day trading is a skill which will require lots of time and patience to dominate. When you do, the world will be your oyster as you daily navigate the daily ups and downs of the money markets.

The reality is, day trading is for the minority – not the majority. Recent statistics pooled together from the largest street brokers (non-professional institutions) suggest that just under 97% of all beginner traders fail. And so the odds are not in your favor to begin with. Nevertheless, you may also be aware that day trading can indeed be very remunerative – providing you develop the right characteristics you can become very profitable very rapidly.

So what precisely separates the successful three percent from the rest of the crowd? In one word – experience.

Learning the intricacies of day trading can be an extremely rewarding endeavour. Speaking from personal experience, building up the knowledge needed to be able to navigate the money markets has been the most rewarding challenges I have ever set upon. No doubt, if you truly knew how much information you were required to digest, you would probably turn away; but let me reiterate, with the right mindset, day trading can become an extremely profitable and rewarding vocation.

In order to assist you on your learning curve many guides, instructional videos and personal tutors ready to help you digest this new and fascinating world of the transnational money markets. One particular book that both I and lots of other day traders have found valuable is a book names “Tools and Tactics for the Master DayTrader,” written by Oliver Velez. Depending on the level of risk of your trading strategy, you may wish to trade either intraday, swing or positionally – this guide goes through all of these styles of trading giving specific charting and numerical cases. Reading up on day trading can be enjoyable – just kick back back with a cup of hot chocolate, wearing your favorite all black converse sneakers and read away.

When beginning intraday trading, you will come across two styles of trading – fundamental and technical. As a day trader, technical analysis should be your best friend. Technical analysis entails looking at historic price data to derive future price movements. The worlds most prosperous day traders owe their success down to truly understanding technical analysis to the letter – if you want to become successful this will be a topic you will have to to devote much time to mastering. The above mentioned book will help you learn this.

Equally as pivotal as technical analysis is cash management. Obviously a trader will enter the financial markets in order to make a good profit, so a good payroll management scheme processed for intraday trading is clearly necessary. At this point it is wise to reference stop losses, and what a huge part of your intraday trading arsenal they should become. To illustrate if you only risk 4% of money you’ve put aside to trade on each position you take, and you only make a winning trade half of the time, after approximately only 4 positions you’ll be in profit.

If at all possible, I would encourage all budding day traders to partner up with other traders. Finding a mentor will both enhance your understanding of money markets, and also quicken your learning process greatly. There are many trading exhibitions around the world – take the chance, attend them and meet like minded traders. Maybe one day you’ll be the one mentoring other newbie traders.

All in all, day trading is a skill which will require lots of time and patience to dominate. When you do, the world will be your oyster as you daily navigate the daily ups and downs of the money markets.

David S Adams




Is there any real value in predictive statistics that traders seem to pull out of thin air?  The proponents of the random market theory (efficient market theory and it’s many variations) would say “absolutely not.”  But the army of Fibonacci proponents and a sea of floor traders who use them beg to differ, because they have watched prices stop on Fibonacci numbers time after time.  The question, then, is a simple one; Someone has to be right and someone has to be wrong, why do the market adherents in each camp disagree on something so fundamental?

Do you find it ironic that we understand the more about the subatomic world of molecules than we know about how the market and it’s functions?  Some of the best and brightest academics claim there is no predictive ability in using Fibonacci trading.  Why?  The science of predictive indicators does not pass the litmus test of scientific legitimacy.  If you have ever traded Fibonacci numbers, can you tell me whether the market will turn on 38% retracement, 50% retracement, 61.8 retracement?  That’s the problem academics have with these systems, there are no empirical facts.  Yet many traders swear by them and are very successful in trading them profitably.

Welcome to the world of day trading.  It’s a world where traders use systems that are wildly varied and the results are unpredictable.  Because the functions of the market are not well understood, as evidenced by the universe of varying opinions on market price action, you will find a plethora of divergent theories and traders who vociferously defend the system they trade to the exclusion of other trading systems.  Further, you are unlikely to find two traders who trade identically, even if their investment philosophy is identical.

Let’s start with the Fibonacci numbers.  The ratio used to calculate this set of numbers is 1.618 and it stays constant throughout the sequence.  Originally identified by mathematician Leonardo Fibonacci in the thirteenth century, their popularity has increased exponentially in day trading.  The question is whether they work, and why do they work.  Anyone who has traded Fibonacci numbers comes to realize that the market often pauses, sometimes turns, and often blasts right through the sequence of Fibonacci retracements.  There is no denying the numbers are relevant, and traders pay attention to them.

But why does the market stop and start so often on these numbers?  In trading we don’t necessarily worry about the “why” questions, if something works or has predictive value it is used.  You cannot necessarily predict which Fibonacci number the market will choose to honor.  On the other hand, many people identify market high and possible lows using Fibonacci ratios, but any trader could identify these point using the alternate method of support and resistance.  Yet this support and resistance often occurs right at the 50% or 61.8% Fibonacci levels.  Sheesh…..

It is my opinion that Fibonacci numbers work just fine, but the reason they work is because so many technical traders use the system.  When the market makes a move from trough to peak, most technical traders will immediately add the Fibonacci retracements to the entire move, and hence the system becomes a self fulfilling prophecy.  And that’s okay.  Many true Fibonacci traders take offense to this explanation, and claim there is relevance in the ratio.  Perhaps there is, but I’m not buying that explanation.  As a chaos theory adherent, I feel the only scientifically relevant explanation is the self-fulfilling prophecy argument.  The Fib people point to ancient architecture and a wide variety of natural phenomena that use the Fibonacci sequence.  It’s true, lots of ancients architects and unexplained phenomena have relevance in their respective fields, but I cannot connect the dots.  Which is to say, “yes there are Fibonacci numbers all about, but what does that have to do with investing?”  The answer is a resounding “nothing at all.”

But I still use Fibonacci numbers in my trading…

As a day trader, my job requires me to take profitable trades.  Whether the Fibonacci sequence is scientifically verifiable is irrelevant to me, as I am only concerned with profitable trades.  I cannot recommend using only Fibonacci ratios in your trading.  However, I always trace in the retracements after a significant market move, up or down.  You would be surprised how often the market honors them, too.  I especially like to trade the Fibonacci when it has already stopped and turned on a specific number, as this establishes real legitimacy for this point on the chart.  Then I can go to work trading, based on the info the Fibonacci has imparted.

So there you have it, the reason the Fibonacci ratios work is unclear, and I am unwilling to bestow mythic credibility based on the history of the ratio.  On the other hand, there is no denying the market pays attention to these numbers.  Whether I believe they are a self-fulfilling prophecy is irrelevant, because as traders we only deal in profitable trades and growing account balances.  The “why” just doesn’t matter.

Jimmy




Day trading is not for the majority – few people have the skills required to trade successfully. Statistics gathered together from the most influential street brokers (non-professional institutions) indicate that just under 97% of all start up traders fail. Thus the chances are not in your favor to start with. However, you may also be aware that day trading can indeed be very remunerative – providing you develop the right characteristics you can become very profitable very rapidly.

So what exactly separates the successful three percent from the rest of the crowd? In one word – knowledge.

Learning the intricacies of day trading can be a highly rewarding undertaking. Speaking from personal experience, establishing up the knowledge needed to be able to navigate the ups and downs of the securities markets has been the most rewarding challenges I have ever beset. No doubt, if you realised how much information you were required to digest, you would probably walk away; but let me repeat, with the correct mindset, day trading can become an extremely lucrative and satisfying vocation.

In order to assist you on your learning curve many guides, instructional videos and online private instructors ready to help you learn this new and fascinating world of the world-wide financial markets. One particular book which both I and lots of other day traders have found priceless is a book entitled “Tools and Tactics for the Master DayTrader,” published by Oliver Velez. Taking into account the risk-reward profile of your trading strategy, you may wish to trade either intraday, swing or positionally – rest assured this book examines all of these strategies of trading giving specific charting and numerical examples. Put on your favourite all black converse sneakers, kick back and do some solid reading.

When beginning intraday trading, you will encounter two methods of trading – fundamental and technical. As an intraday trader, technical analysis should become your best friend. Technical analysis entails looking at historic price data to deduce future price movements. The worlds most richest day traders owe their success down to truly understanding technical analysis to the letter – if you want to succeed this will be a topic you will need to devote a great deal of time to mastering. The above mentioned book can help you on this.

Money management is equally as essential as technical analysis. Obviously a trader will enter the world financial markets in order to make enough profit to make a living from, so a strong payroll management scheme specifically refined for day trading is a must. At this point it would be helpful to reference stop losses, and just what a huge part of your intraday trading arsenal they will become. For example, if you were to risk 4% of money you have set aside to trade on each position you take, and only fifty percent of the time you make a winning trade, after only approximately 4 traded positions you’ll be in profit.

If possible, I would encourage all budding day traders to seek out other more experienced day traders. Finding a mentor will both enhance your reasoning of financial markets, and also quicken your learning process greatly. Many trading conventions around the world – if you have the chance, go to them and meet like-minded traders. Maybe one day you’ll be the one helping other newer traders.

All in all, day trading is a process which will require much time and patience to dominate. But when you do, the world is your oyster as you navigate the daily movements of the world financial markets.

Scott Cole




Day Trading continues to be one of the most alluring professions as it is one of the few professions that allows you to be self employed and completely independent of bosses, employees and even clients.  It is a profession that you can also do easily from home.  All you need is a computer and high speed access to the internet.

 However, Day Trading is also one of the most difficult professions, with a failure rate estimated by most as at least 90%.  The biggest reason for this high failure rate is that most new day traders start out with too little capital, and the expectation of being able to pay their bills with their trading profits.  Another big reason for this high failure rate is that most new traders start without a coherent game plan or strategy to trade.

 Due to the nature of the financial markets as being one of the few ways an individual can make a lot of money in a short period of time, there is a substantial amount of information trading that is forced down the throats of new traders.  Much of this information is usually the typical package of indicators that may indicate whether a stock or market is overbought/oversold, or some kind of price pattern or price/volume relationship that may identify a favorable time to trade.  There is also the more radical type of information based upon Elliott Wave, Fibonacci, cycles and even astronomy. 

 However, it is rare that you will actually read any information that provides you with a strategy for identifying a market to trade, when to trade, how much equity to risk, when to exit when the trade goes against you, when to take profits, etc.  Once you are provided with their magic indicator, you are forced to come up with this information on your own. 

 Well, here are a few tips for successful Day Trading. 

1. When you are Day Trading individual stocks, look for stocks that have significant volume and liquidity.  The same can be said for other markets, such as commodities, currencies, interest rate futures and stock index futures.

2. When you begin Day Trading, keep your initial profit goals modest, and never start Day Trading without another means of income to pay your bills.

3. Before you begin Day Trading, you should have a well thought out, basic strategy for trading the markets you plan to trade.  For instance, if you are looking to scalp in and out of the markets throughout the day, develop a strategy that allows you to utilize 5 minute charts or even shorter time frames, that looks for a specific trading set up that allows you to enter a trade while minimizing your risk. 

4. Once you have developed your plan of attack, think about potential situations where you may have to deviate from your plan.  For instance, you may enter a trade based upon your strategy, but the market does not act as it should.  Sometimes, it just pays to exit, rather than wait for the market to stop you out.  You can always move on to the next trade.  The best trades will usually move in your favor quickly if you enter at the right time. 

5. Consider multiple entries and exits for a single trade.  For instance, on a short-term scalp trade, set a profit target that allows you to lock in some profits fairly quickly.  Once you have locked in that bit of profit, you can let the rest of the position ride in order to shoot for a more significant profit with little risk.

6. When trading individual stocks or stock index futures, consider learning how to read the tape to put the odds more in your favor.  For instance, trade only in the direction of the underlying trend of the market for the day, and confirm this trend with such indicators as the Advance/Decline ratio, TRIN, Tick, and the performance of all of the major indexes. 

7. Look for price patterns on the daily charts that may hint at a directional bias for your market of choice, then trade in the direction of that bias.

8. Avoid taking trades in the first 15 minutes after the market has opened.  This is amateur hour.  The true direction of the market you are trading will usually reveal itself after this period of trading. 

9. Make sure your strategy adjusts your position sizes to account for changes in market volatility.  As volatility rises, lower your position size, and as it falls, increase your position size. 

These are just a few tips worth considering as you embark on Day Trading.  Remember, there is no perfect strategy that will be profitable 100% of the time.  However, if you develop a strategy that puts the odds in your favor, and you are able to stick with it in the long run, you should find yourself to be profitable in the long run.  

Scott Cole www.bestdaytradingstocks.com www.kungfutrader.com