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Trading Intra-Day

Intra-Day Trading Information

Daytrading is something that MOST people should really learn before they jump into it. Daytrading is not as easy as most people make it out to be. There are many many small trends on a 2 minute chart and daytrader's should have the General Trading Knowledge mastered before they try to apply these theories to intra-day trading.

The issues with daytrading are simple... more trends, fast and short trends, as well as the trader has to be able to execute trades and make decisions very quickly. I've found the longer term charts (daily and weekly) to provide excellent trading opportunities. So, my suggestion is to daytrade only a portion of your total equity (maybe 10 or 20%).

There are a number of excellent daytrading tools that are available. Most of them are based on "range breakouts" or "trend following" systems. Others are based on "pivot points" and other advanced calculations. The interesting fact about most of these is their simplicity - they are providing (in some cases) simple theories for daytrading. I'm not saying these don't work - in many cases they do. These are often good sources of information for traders that are new to daytrading.

Daytrading for a living is another thing. Many times, daytraders have to build up the "constitution" to be able to do this for a living. Meaning, most successful daytraders are those that have a system or method and stick to it over and over and over. There is no "magic formula" that will result in fanstastic results. Most daytraders that I know plan their trades around a theory or method they have faith in and continue this process over and over.

As I see it, there are basically two types of daytraders...

The "Micro" daytrader and the "Macro" daytrader - sometimes the two intermingle.

The "Micro Daytrader"

This individual concentrates on the microscopic moves of price action and is often attempting to "scalp" small points from a price trend. They attempt to scalp at a rate of about 2:1, 3:1 or higher. Meaning if they are trying to get $0.30 from a trade, they might risk $0.10. They often use reversals, trend breakouts of other forms of triggers - then place their trades.

Some of these individuals use "tick charts". These are charts that are based on the number of printed "price ticks" instead of "time" (like other charts). Often, they will use odd number tick charts - like 280, 140, 95 or 33. Tick charts sometimes show trend more clearly than time charts. Although, there is one MAJOR drawback to these really short intervals - CONGESTION.

Congestion is the "killer" of most trading systems. There are some who believe that you can trade congestion (probably trading upper and lower ranges), but I actually doubt it. When the trend is going sideways, scalping may work for a while, but eventually losses will happen. My advice to traders experiencing congestion, STAY FLAT till the market breaks out of the congestion range.

Micro daytraders are kind of a different breed. They make calculated risks (often many times a day), and if they are correct, they may end up ++ for the day. The better their trigger system is, the more likely they are to have more consistent profits.

The "Macro Daytrader"

This individual concentrates on the more of the overall price trends and tries to trade "with the trend" or "counter-trend". These traders are often only trading once or twice a day (if at all). The purpose of these type of traders is to find the best potential trades and let the market make it's move. Kind of like jumping on a moving train and riding it a while. Just wait for it to start moving, then jump on for a ride.

Most of the time, these traders have defined trading styles or screening methods too. Sometimes, these traders play "news stocks" or maybe "certain sectors" - they are screening for stocks that have a potential for a decent trend move. Other times, these traders play certain markets (like the Emini, Forex or the QQQ - that trend almost all the time).

The interesting factor for most of these traders is they almost always have different ways of attacking the markets. This means they all use different strategies to generate their trigger points. Sometimes it is a combination of indicators, or a breakout system or possibly price patterns.

I guess the end result is, "There is more than one way to skin a cat" (no offence to cat lovers - I'm one too). But it makes sense that if there are all these different kinda of entry triggers (and we assume most of them work), then the difference has to be in the "way the trade was executed" - or "the trading plan".

Thus, back to my original point, learning to trade and to develop a trading plan is the most important thing any trader can do to maintain a successful trading adventure. Finding entry triggers and adjusting stop/profit target levels is up to the individual trader. Knowing what to expect and how to deal with the future of your trade is the big difference. When you add a trigger system that is 50/50 (or better), you should be able to consistently make money - right?

Are you ready for the next "twist" to this fast-paced game for traders.....

The "DOs and DON'Ts of Daytrading"

Yeah - like I have a list that you can just read and follow. I don't!

I do have some advise though. In my 15+ years in this industry, I have found that most daytraders don't just concentrate on the short-term charts. They also review the Daily and Weekly charts for other signs to support their decisions.

Of course, the "Micro-scalper" may not really care about what happened yesterday or last week. All they care about is today and how much trend will today have. This gives them more opportunity to profit from the markets.

I quess what I'm trying to say is "Always track multiple market time-frames because the more information you have to make your decisions, the better informed your decisions shall be". Yeah, knowledge really is a powerful thing.

What to do and what not to do?? Go back to General Trading Help for that stuff...


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