Day Trading tips

A sudden shift in prices indicates an aberration, an exception. A gradual move is characteristic of a trend.

What it is essential to know if you want to trade on the electronic stock market: What is meant by the market, how many are there and how are they connected, who are my fellow competitors (brokers, dealers, market makers, online traders, day traders, defrauders, gamblers, bluffers, and so on). What's the difference between the bullring and the electronic stock market. What are limit, market and fake orders. What is manipulation. What are automatic buy and sell programs, block trades, long and short trades. What is the relevance between bid, ask, last, volume and time. Scalping, investing, speculation, and gambling. Liquidity, transaction fees, volatility, price and profit. How do the markets work and how do governments and institutes intervene and exercise control. The influence of the media. Why a particular trader succeeds and the other fails. When you are conversant in all the above then you stand a real chance of exploiting the financial world to your advantage.

Day Trading is a method to make money on the stock market. Movement and animation are allies, stagnation a foe. Dramatic movements in both directions are the most favourable.

A Day Trader buys and sells 5000 shares in a time window of 5 to 20 minutes. He has to work swiftly, using online information and experience to calculate the direction of the market in that tight time window.

Day Trading is not a burdensome enterprise. Learn the basic principles well and you are up and running.

Banks and financial institutions want you to believe that Day Trading is a risky, complicated snake pit and keep you out of the picture. They don't want you in on the game, undercutting them and ignoring their excessive fees by taking your business to a cut-price online bank. These dinosaurs don't want to share the gravy train or cut you a slice of the cake. They confidently make truck loads of money as long as you believe two blatant fallacies: 1) Investing is too risky and complicated for the average person. 2) That you must use financial advisors (and pay their substantial commissions) because that is safer than doing it yourself using your own innate intelligence and paying a couple of dollars to an online bank.

Day Trading is like being on the make, you're on the look out, you find an opportunity, you trade it, then forget it.

Successful Day Trading can be a kind of drudgery, you stick to the plan and steadily work from the ground up, brick by brick.

The 10 most common mistakes that are repeatedly made:

1. Failing to use trading range as a basis.
2. Lack of patience, not waiting to allow the market to shake itself out.
3. Offering more for a share that had just been valued for less.
4. Being too greedy for profit on each individual transaction.
5. Giving too much importance to minor indicators.
6. Using alcohol or drugs while trading.
7. Inadequate background reading.
8. Favouring your own opinion above the masses. Allowing arrogant assumptions to dictate your actions instead of recognising and reacting to the sentiment of the majority that always dictate the prevailing mood. The stock market reflects at any given moment only what a collective feel at a particular moment. You might have thought that I mistakenly used the word "feel" instead of say, "think," no, markets do far more feeling than thinking. Crowds are notoriously fickle, in a trice their feelings/ opinions can change. The prevailing operating conditions of Daytrading are a state of flux with brief respites of uneasy calm yet these circumstances offer opportunity enough to the shrewd to make a good return on a modest investment. Difficult circumstances are not necessarily unprofitable.
9. Trading when bored / for distraction.
10. Additive trading.

It is only when we understand that the market is completely unpredictable that we stand a chance of making some money.

We cannot predict when we will die, be happy, get sick, when a terrorist will strike, never mind the topsy-turvy movements of the market. The distinctive aspect of Daytrading is it has nothing to do with predicting the market and everything to do with reacting to the course/ state of the market.

It took me a considerable time to realise that no one can safely claim to know what the markets are going to do. Once I had put this theoretical knowledge into practice, only then did I make consistent profits.

When the prevailing opinion is that something is overpriced the more likely its price is going to fall. The reverse is also true. The more it is said that something is under priced the more likely it is that it's going to be revalued upwards. This holds true of all commodities and services be they bananas, clothing, telephone rates, real estate or stock market shares.

Daytrading is a game that demands constant adaptation. It is no longer the easy ride once was in the carefree 90's. The rewards are still plentiful but you have to keep apace of the ever changing circumstances and shrewdly exploit what each opportunity offers.

If your occupation is your hobby then you never have to work!

The benefits of Day Trading are starkly revealed when you compare it to other occupations. No deadlines, no outside pressure, you set your own agenda, you are in the driving seat.

One of the drawbacks of Day Trading via the Internet is that you never have direct contact with money. Trading capital, profits and losses are only numbers on a monitor. A partial suspension of belief can obscure the underlying reality that profits are real and losses even more so! Day Trading can at times have the appearance of being an intriguing video game but you would be well advised not to treat it as such.