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Preparing Yourself For Day Trading Is A Good Way To Overcome Trader’s Fear

August 21, 2011 — 11:01 pm

Your biggest enemy as an incipient Day Trader day trading tips is Fear. You will probably never entirely get over it, but you can reduce it by becoming aware of several factors that contribute to what I call “Trader’s Fear”. You need to consider these “Trader’s Fear” factors before you launch into Day Trading :

Fear Factor Number One: Being Uncomfortable With The Market.

If you want to make as much money possible as a Day Trader day trading techniques, you need to squarely face a few issues, including the actual comfort you personally have with trading in the Stock Market. If you are terrified of making a mistake, that fear will paralyze you and cause you to make the same mistakes over and over, for example pulling out when you should stay, trading prematurely (or long after the Indicators signaled you should have entered a trade) — just to name a few. If you are scared the entire time you are in a trade, you won’t be able to move past the problems that will dog you, and you won’t be able to “pull yourself together” when you absolutely need to.

Fear Factor Number Two: Going Cheap on A Broker.

Choose an experienced broker. It’s tempting to go with a broker that charges a low commission, but many times these individuals have little or no experience and they won’t be effective in recommending stock or helping you foresee unexpected problems. In my own case, as an example, I went with a broker who was “new to the game”, having just entered Stock Market brokering from a career in High Tech. He recommended some high risk Biotech companies that lost most of the money I invested. You need to go with an experienced broker, not a cheap one.

Fear Factor Number Three: Not Enough Practice Trading.

Spend time in the practice account before turning to real transactions. Don’t rush into “live trading” until you have spent a great deal of time practicing with the broker’s “funny money”. Practice accounts have an upside and a downside. On the one hand they help you see the impact of changes in the market on your profits and losses. You can make a few risky decisions in the knowledge that you are not really risking your own, real money. The downside is that you make risky decisions that you won’t make with your own money, and practice trading won’t really reflect what you do when you trade in a “live” account. The “Trader’s Fear” factor isn’t with the demo account the way it will be when you convert over to a “live” account — and that can mean all the difference in the world. Still, you can determine your most comfortable investing style with a practice account, which will be helpful.

Fear Factor Number Four: Not Knowing Enough About The Companies You Are Investing In.

Once again, had I known that Biotech stock was as risky as it was, I wouldn’t have touched it. Do your homework. Find out exactly who owns the company, how it is doing financially, what economic factors may influence it, and what Market Gurus are saying about it. Find good sources day trading strategies of information and read as much as you can before you “place your bet”. Check out financial reports you can purchase online. This information will always lag behind events, however, so find sources that are as “real time” as possible.

Fear Factor Number Five: Launching Too Soon.

Take your time getting started. As long as you feel like you are leaping off a cliff, the anxiety will be much higher. Take your time with research, with dummy trading, with getting to know the Market in general. Read what advisers and market gurus have to say about how to trade with confidence. If you are careful about how you get started, things are going to go much smoother and you will have fewer problems. Never just dash into the process and hope for the best; prepare yourself as best you can, but also keep in mind that at some point in time you have to actually start. You can’t let fear keep you from doing THAT, either.

Fear Factor Number Six: Failure To Learn To Live With Risk

Day Trading is living with risk. Get used to it. Learn to love it and thrive on it. At the same time, learn how to reduce it. Learn how much money you can risk in a trade, and prepare yourself to lose it all. This means you don’t mortgage your house, or bet your retirement. Never risk more than you can lose, and be prepared to lose it.

Reducing fear as a Day Trader requires that you have a basic foundation in the Market: the manner in which it operates, how it is going to influence your trades, and how to make a profit. Avoiding the market until you decide to start Day Trading might make you anxious and nervous while you figure out what your best approach will be, but taking the time to reduce these “Trader’s Fear” factors is vital.

Above all, don’t rush it. Take your time to make sound investment decisions and ensure that you are on your way toward ultimate success. Some people can do this in a short period of time, but don’t let that stampede you. There is no set time for you to become comfortable with the market — and become a successful Day Trader.

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Scalp Trading For A Proprietary Trading Firm

April 25, 2011 — 4:56 pm

If you read my previous article, you will have a good idea what scalp trading is. You will also have your direct access platform set-up like a scalp trader. Now it is time to start to cover the strategy. Before you start to look at stocks and decide whether it’s a good short or long trade, you need to know the methods of entering a position. From my last article I described the level 2 and the definition of adding or taking liquidity, which you will need to understand in order to get this next part. To simplify the methods of entry I am only going to cover 2 at this stage. They are called the momentum entry and the average-in.

Scalp Trading Momentum Entry Method

When using this entry method you will be taking liquidity. You use an inside limit order. This means for example if you are going long (buying shares with the intent of selling them higher) you send a buy limit order at the inside “Ask”. Why use a limit order rather than a market order? This is because you will be using this method of entry when you see momentum building in the Level 2 and Time & Sales. Often when this happens the fills achieved from the market order end up different from the price you saw on your screen (this is referred to as slippage). An inside limit order stops slippage at the expense of not getting filled or perhaps only getting a partial fill.

Scalp Trading Average-in Method

When using this entry method you will be adding liquidity. This is where you plan multiple entries to achieve a position that suites your risk tolerance for this stock and trade. So say for example you want to be long 1000 shares. With the momentum method, described above, you would take the entry with the full 1000 shares on the start of a momentum move. This is not the case with the average-in method. You would “Bid” 300 shares at a price level almost certain to get hit. You then “Bid” another 300 shares at a lower price level which has a good chance of getting hit. Finally you “Bid” the remaining 400 shares at the lowest price level you realistically think you could get hit at. Each time you get filled your average position price gets improved.

It is worth noting this is not averaging down! Averaging down would be “bidding” the full 1000 shares on the first order and then when the price moves against you “Bid” another 1000 shares to improve your average position price but at the expense of your risk tolerance. You have exceeded you risk tolerance because you planed on a 1000 shares position but now, of course you have 2000 shares. Trades become much harder to manage when you trade outside your planed risk tolerance (I will cover risk tolerance and planning in future articles)

Exit Method

There will be only one method of exit for now. It is the average-out. This is like the average-in but in reverse. Continuing with the long example above, once you have your 1000 shares you “offer” 300 at a price very likely to get taken. Then another 300 slightly higher. Finally the last 400 at a realistic level in line with Technical Analysis (which I will cover in future scalp trading articles).

For New Scalp Traders

It is important to master the scalp trading average-in entry method before using the momentum method. In my next article I will cover a Strategy where these entry and exit methods can be used.

Affinity Trading provides Day Trader education for those seeking to become professional Day Traders. Focusing on both the forex and stock markets, Affinity provides day trading education with a niche focus on scalp trading. Click now for: forex trader.

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Learn How To Day Trade

April 15, 2011 — 11:15 pm

To master day trading requires the training related to several types of day trading investing styles. These particular styles are varied for traders and generally go with their character together with their specific needs. If you’d like to learn day trading, surely you have heard of, or even will be taught about scalping. This specific practice is when a trader holds their position for a short period of time. Which could range anywhere from secs to minutes. It is vital you don’t attempt scalping when you first do it because it needs timing, skill and experience with knowing what can happen.

Another way explained to trainees that want to master it, involves the method referred to as position trading or shorter term swing. Despite the fact that position often mean trading over a few days, weeks or months. It requires short-term action. If perhaps you prefer to trade over the longer term, then different rules apply. However , you can keep a position in the same day and profit in the end.

Trends: Daytrading Options

To understand it you also need to look at the various trends. Those different trends normally include ranging trades, counter trade trends and also continuation trend trades. Mainly, counter trade trends are those trades that are made within the stocks or shares prices as they begin to edge directionally or upwards against the price movement. Ranging trades are those trades that generally pace back and forth among two certain prices and generally come into play if you experience a sideways movement in the market. A continuation trend trade is that specific trade that is transacted in the way that the price movement is flowing. To learn them it’s important for you to utilize different trends depending upon the market scenario, so that you can take opportunities as they come.

Different Strategies Related To Daytrading Options

To be able to learn it, it is important for you to realize that the goal is the same, for making profit, nevertheless the method may be different in accomplishing that objective. As an example a few investors might study it by capitalizing on various market fluctuations and also trade often through the entire course of the day. However, one more choice you might take into consideration when you study it is to hold off trading ’till the end of the day and study the optimum market situation and once that time occurs conducted trade and end up making a profit by just completing one single trade within the day.

Should you want to learn forex trading or forex trading strategies, you can visit definiteforex.com to obtain more knowledge regarding how to trade forex online.

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How To Become A Day Trader

March 10, 2010 — 3:03 am

Day trading is the act of buying and selling stocks for the duration of one trading day. That means buying when it is low cost, selling when it’s more expensive, all during the same day and finishing with no stocks in your name by the end of the day. As you can expect, there is a potential for great profit and also great loss. It does take capital though, and might just lose everything. Allow me to share a few tips on how to be a day trader.

First off, the amount of money you use should be money you can afford to lose. So putting aside some of your savings, and not quitting your day job. You’ll not want to make this your main income source until you are fully confident of your skills. Why reserved only part of your savings? Well, you could easily lose much of the cash you put into the market particularly if you’re a novice, and so it may be beneficial to have something in reserve.

Next, get an education. We are not exactly talking about taking finance in some institution somewhere – if you did you might also be a full-time stock broker, right? No, in this case we are referring to brief courses available on the internet. There are many online entities that offer tutorials, reference material, and practice opportunities for wannabe day traders. Prices and qualities may vary, so ensure that you browse and select carefully.

Third tip: observe and study thoroughly. Pay attention in these classes in order to get your money’s worth or even more. If you know a very good day trader, ask if you can sit in on one of his / her sessions. Be aware of how large a margin they use to determine when to purchase and to sell. If you are in the market yourself, note your mistakes and successes carefully. That way you can refine your style and get greater profits.

Should you be not quite that confident yet, try swing trading. No, that isn’t the trading of playground equipment. Rather it is the practice of buying and selling stocks, but holding them for days or weeks. It’s a less intensive variant, which you can use as a stepping-stone to day trading, where exchanges can happen within a few minutes.

Look for a discount brokerage that allows trading online. With the ability to do your trading online is much more convenient than the classical models for brokering. These smaller firms will also have lower minimum amounts for establishing accounts. Some can even go as little as USD2500 for a new margin account.

Our final tip on how to be a day trader: do not follow the herd. Learn to spot and discern whether the rush to buy or sell is justified, or if the herd is a herd of lemmings racing off a cliff. Just because lots of people are doing it’s no reason that you should do it too. Don’t allow the bandwagon mentality take over – stay smart.

John Irish is a financial advisor, stock broker, and professional consultant. He enjoys reporting on the latest stock market happenings and offering advice to both fledgling investors and experienced day traders.To learn forex trading is also one of his passion. Please visit learnforexsecrettrading.com to get more information reagarding forex trading strategies and forex free trading.

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