Two Simple Day Trading Tips Giving YouMarket Edge
I wouldn't recommend day trading to anyone who is just starting out,however, this doesn't change the fact that many new traders aredrawn to day trading like bees to honey. Why is day trading sopopular? This style of trading is the only strategy that offers extremelyhigh rates of return in very short periods of time. However, these highprofits do come with extremely high levels of risk. If you aredetermined to day trade, then you need to know a few things to makesure you do everything possible to give yourself a trading edge.Ignoring these tips only places your trading capital at unnecessary riskand increases your chances of suffering losses. Trade with the trend. You've heard it before and might wonder why aday trader needs to worry about the trend. Isn't day trading so shortand fast that you don't need to worry about the trend? Wrong! This isa mistake many traders make and they pay for it dearly. Day tradersstill need to be concerned with the major overlying trend because thistrend affects every level of trading. If you trade with the direction of the higher time frame trend, you increase your odds by making sureyou trades are going with the flow of the market and not against it. This doesn't mean that day traders can't trade both directions of themarket regardless of the trend, however, it does mean that if youtrade against the market you greatly increase your chances of suffering a loss. The next piece of advice applies to day traders as much as it doesevery other kind of trader. Stop losses are necessary and you need tomake sure that it is not too close. Markets trend but they typically donot trend in a smooth fashion. There is noise and seemingly randomless price action along the way. You may open a trade only to find outthat your trade was knocked out and then the market turned andcontinued on in the direction you had originally traded in. The endresult was that you would have had a winning trade, but your stop losswas too close. Always make sure that your stop loss has enough roomto give your open trade space to breathe. Putting a stop loss too closemakes it easy for the market to knock you out before it continues on.