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.
The amateurs don't affect the market in any significant manner. The pros, with their big positions and their commitment to hold trades for longer periods of time, create longer term moves that can provide large profits.
Some people are attracted to day trading for of the excitement of the business and the potential for fast money. This attitude sets one up for disappointment. Day trading does not have the energy of a video game. Professional day traders stay on the sidelines for waiting for a high-probability trade to set up. They trade less frequently than the amateurs believe.
Second: The common axiom "The trend is your friend" is a half-truth.
The truth is that the trend is a fair weather friend!
It is your friend early on. But trends get "tired" and eventually end. So the full axiom is actually, "The trend is your friend, until the end."
Therefore there are 2 times to trade when you can put statistics on your side:
Early in a new trend.
Late in an old trend.
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: Listen to free chat rooms for day trading tips and do exactly the opposite!
The benefit of chat rooms is often not found in listening to the moderator. It comes from listening to the comments of the participants as they reveal what trades they are taking.
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 very profitable, but to succeed you must not align yourself with the masses. You must avoid the herd instinct that drives the losers. Use these 3 day trading tips to help you on your journey toward being one of the minority who succeeds.
About the Author:
Dr. Barry Burns is the president of Top Dog Trading, maintains a day trading blog and offers a free 5-day video course which offers day trading tips. He has spoken to DayWealthUSA, "Elite Masters of Trading," and Wealth Expos.
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