Day Trading Tips To Turn Amateurs Into Pros
Day trading can be a fun and exciting way to make money. But it’s more difficult than most beginners imagine. Here are some day trading tips that can benefit the new trader as well as the more experienced trader to help you achieve 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 amateurs do not affect the long-term movement of the market. The professionals, with their large volume and their willingness to hold positions longer, are the ones who create sustainable moves in the market that can provide meaningful 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 trend is your friend … sometimes.
It’s more accurate to say that the trend is a fair weather friend!
It’s true that the trend is your friend early on. But trends get exhausted and end. It’s more accurate to say: “The trend is your friend, until the end.”
There’s two times when you can put the numbers in your favor:
At the very beginning of a 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: Listen to free chat rooms for day trading tips and do exactly the opposite!
I’ve participated in many chat rooms over the years, and have received a tremendous benefit from them. But the benefit did not come from listening to the teacher. It came from watching the comments of the participants as they shared what they were doing at any given time in the market.
The vast majority of the time they were dead wrong in their approach.
They expose the collective thinking of the unprofitable amateurs. It’s scarey to notice how the amateurs all reason alike when it comes to day trading. If you watch them in the rooms for several months you’ll begin to identify clear patterns of things they do wrong over and over again. Do the opposite and profit.
As an example, one of the most common problems amateur traders have, is resisting the urge to fight the trend. You’ll often hear comments such as: “The market can’t go any higher than this.” “This market just has to turn around at this point.” “The market is definitely way over-extended now.”
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 enjoyable and financially beneficial. To be a success, however, you must avoid the herd and stand apart from the masses who lose their money. Employ these 3 day trading tips to put you squarely on the path to profitability.
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