How to Become Efficient in Day Trading

Day trading is something which you can never rely on. But if you have appropriate information about it you can have success at your feet. If you spend a lot of time learning about a company you will definitely know about all its strategies and the way it works. And it is here that you start your share of profits. It is then that you can get a lot of tips to work on and can have a lot of idea as what to do and deal with.

If the stocks are liquid and volatile it means that you can enter the market and exit at your own choice and at a price which is good enough for you because the liquid stocks are those which fetch a good value and you can buy and sell them at any time you want. In such types of stocks there is a bid price of a stock and the ask price and there is too little difference between the two. There is also no fall between the real price of a stock and the expected price. Apart from liquidity the volatility of a stock means the range of a stock, that is how much can it fall or rise during the trading day.

When you want to enter a particular kind of a stock, you need to keep certain things in mind. There are some ways by which you can determine how to enter a stock. There is a pattern known as candle stick pattern in which the reversal trends are displayed in the value of a stock. After that we take a look at the buyers, whether they are buying the stock or not.

There are some strategies by which a stock becomes very profitable and hence making you earn more money. One of them is Scalping. If you apply a fading strategy it means that you take out your money out of the stock as soon as you realize that the prices are going to fall. If you are a regular trader you can make use of some daily strategies like pivoting in which you see the daily trend and invest money in your stocks as per the strategy. When you trade as per the news which has come out or what I happening around you, it is called momentum.

If you set a stop loss to your stock you can avoid losing unnecessary money on your stocks. In this you will take no risks and will trade the stock at its lowest value. Whenever you reach a stop loss condition it signifies that you should stop trading for that day or else you will land up in losses.

By using the above mentioned strategies you can become an effective stock investor.

How Effective is Online Day Trading?

Online day trading still remains one of the potent ways to reap profits in stock market today despite the unpredictable nature of the market and against all emotional odds. It has been observed that day trading online has several potentials that can make your investment grow and is also very much capable of changing your entire mentality towards the market in general terms. Funny enough, there have been so many arguments concerning the effectiveness of this method. Many people had in one time or the other in the past submitted that only cowards and those with superficial knowledge of investment principle day trade stock online and that such people only do so because they cannot take the needed time to study the stock market intricacies in order to be better positioned for other viable market opportunities that are inherent in other trading methods.

It is in this premise that I would like to let you know the various advantages of day trading online over other known stock trading methods. The first vital point to consider here is the technology. Yes! Many thanks to internet technology that has made virtually everything possible; we are now able to get several things done with less hassles at the speed of light. Harmed with a computer that is connected to the internet, you are able to search for stock broker with friendly policies online even at your leisure time; and the greatest advantage here is that you are in control and you can always choose to remain in control in as much as you are always at alert and sensitive to the vagaries of the market.

Online day trading still remains very effective as long as internet accessibility remains accessible. Show me a smart stock trader, and I will show you someone who day trades. Let us face the fact straight; most of us in the stock market today are day traders including you my reader even if you are a prospective investor, I believe online day trading attributes run in your veins which implies that investors majorly gun for quick profits on their stock investment by day trading online.

Another vital advantage of online day trading is the flexibility you will enjoy in the choice of your investment. When you have made up your mind to day trade online, you may not need to understand everything about the stock you are buying, day traders in most conditions judge the potentials of a stock to buy based on its recent antecedent and the interpretation of stock symbols is never taken with levity simply because it is enough yardstick to predict how a particular stock will fair over a given period of time. Better still, online day trading is freedom, effectiveness, efficiency and prudence if indeed you are determined enough to make it work.

Live Forex Day Trading Education

Day trading education comes in many forms and varieties and from a wide array of sources. However, one aspect that is necessary for any form of day trading education to be effective is that it takes place in a live forex trading room, in real-time market conditions. Day trading by its very nature requires the trader to develop live chart reading skills, if you are trying to learn how to profitably read charts in order to become a forex day trader, than the only truly logical way to learn this skill is from an experienced day trader in real-time via a live forex trading room.

One of the benefits of learning from a professional trader in a live trading room is that you can watch them trade their own real money while you simply demo trade the same setups. This allows you to see how a professional trader makes their trading decisions under live market conditions with real money on the line. In this way you can learn what to do and, probably more importantly, what not to do without having to risk your own money. After you learn the intricacies of day trading the forex market, you can then move on to trading real money with all the knowledge and guidance you have received from your professional forex trading mentor. This will greatly shorten your learning curve and likely save you thousands of dollars of lost money in blown out trading accounts.

Where can I find great live forex day trading education?

Well it is fine and dandy to hear why you should obtain quality forex day trading education, it is another thing to locate it, as there are many websites out there trying to sell you some mechanical trading system that is nothing more than a well-marketed hodge-podge of lies designed by non-professional traders. One great website offering live forex day trading education is called day trading forex live (DTFL). This website offers a live forex trading room where you can view the same chart the senior trader is using to make live trading calls. There is also a comprehensive video education course offered on this website at no extra charge which includes the same strategies used in the live forex trading room for entries, exits, and trade management.

One of the notable features that set DTFL apart from other similar educational services is that they teach you how to evaluate what the price is doing rather than relying lagging indicators. This allows you to eventually trade on your own without the hand-holding of a daily trading room; this is one big indicator that their service is coming from people with genuine intentions, as opposed to the numerous money-hungry scammers out there. Some of the other great features offered at DTFL include a solid education on how to profit using support and resistance levels, how to read the market based on simple chart patterns, specific candlestick strategies, and WHEN to implement them. Psychology is a huge part of trading, and DTFL offers a solid education in the psychology of trading, money management, and how to effectively handle the daily stressors of trading.

When Trading Becomes Gambling

To build a relationship between gambling and trading, let's define gambling and its special attributes. Gambling is the act of risking money with the hopes of more monitory gains in a very short time. It is governed by both skills and chance. The attractiveness of its supernormal returns makes it addictive in nature. The choice in gambling is based on preference of favorable position, often based on instincts, astrology, numerology or other similar methodologies. If played in an uncontrolled environment, gambling can be destructive and can ruin the lives of the gamblers or their associates.

As far as trading in stock exchange is concerned, one has to put in his money to buy stocks/derivatives or has to make a promise to buy the same at future value via quick sale, an act, by which a person can make additional money or lose a portion/all of his money, hence, trading is also an act of risking money with the hopes of more monitory gains. Also, the trading, by definition is done for a short duration lasting anywhere from a few minutes to a couple of days. Again, there are many cases of people making supernormal returns and people loosing all their wealth. Both of them coming back again in the market with new hopes and having a kind of addiction to the stock market. There is a sudden rush of traders and even analysts making deals based on instincts and astrology. The stock market has also ruined many families and ripped many aristocrats.

With these arguments, any layman can easily accept this hypothesis that trading is another synonym of gambling. Indeed a trading is a form of gambling, a gambling with a difference. The first difference is that in a gambling, the odds of winning are never above 50%. These odds of winning fall further in professional gaming zones or slot machines. Some slot machines have around thousand combinations of outcomes out of which only 25 to 30 combinations of symbols are rewarded. A roulette wheel has 37 positions where betting can be done on each number or a set of even/odd/black/red/first/last half numbers, but, here as well the chance of winning is at max 18/37, slightly less than half. Coming back to trading, the chance of making money keeps rising with more experience and use of sophisticated tools. From technical analysis to fundamentals, speculation, global news, there far too many sources to increase the predictability. Hence, the decision taken in trading is an informed decision, not solely based on luck, but, on hundreds of other parameters. Another key differentiator is the level of losses. Unlike gambling, where most of the games or machines are designed to take away all the betting amount on loss, trading has a choice to limit the losses with stop-loss and similar inputs.

Both of the above key differentiators create a boundary line between trading and gambling. But, these lines are very faint as many people don't buy the argument that trading is different from gambling, all because of incorrect or partial knowledge. It is because of such people that the bad fame of trading as gambling spills over to investment group as well and people mistakenly believe that the entire stock market is gambling. This belief has caused a destructive effect for the market by keeping many potential investors to stay away from pooling in their resources. The solution to this problem is to either create much more awareness for these prospects or reduce the number of traders as, no one needs these traders anyways. No company management would like its shareholders to be composed of only short term traders, neither do the long term investors like them. The only group appreciating them and lobbying for them are stock brokers, who want more and more trading volumes as their income is not dependent of client's profits or losses but just merely the volume being traded.

Traders Roundtable - Do I Need to Have a Directional Bias to Be a Successful Day Trader?

There were two duelling hypotheses at work today in the market, looking at symbol: in SPY, the exchanged traded fund for the US S&P 500 index.
Price had gone back and forth between buyers and sellers, bulls and bears..

Was the high of the day seen at 110.8 and /or was the low the day established when price it 109.56?

Depending on your directional bias for the intraday trade, either one of these hypotheses could be true and is supported by evidence the price actually reach those levels during the morning trade.

Which bias is correct?

Now note that you don't have to have a long bias or a short bias, exclusively. You can have both but to a certain degree; it's a "fuzzy logic" concept.

A person that is 5'6" is short (to a certain degree) and tall (to a certain degree), as is a person that is 6'3". They have differing degrees, and differing amounts of evidence;

Remember, the context matters too: 6'3" is tall on the street, but not in the NBA; 5'6" is tall in Thailand.

So, the market momentum or price condition, its "state of nature" has elements of both long and short in it; it must, by definition, or it wouldn't be a market.

In the same way yin-yang has elements of the other even in the most extreme moment

The moment it became "all long" the market would cease to exist..

So, at any moment when you are trying to get a read on which way to be looking, you must actually be simultaneously holding both ideas in your head, and evaluating the evidence of likelihood and opportunity in both directions to make a decision about which way offers you more value.

The trade MUST be able to be framed by someone in some time frame at some probability of gain, because someone is taking the other side of the trade.

To me, that is the essence of thinking about the reward to risk ratio of 2:1 all the time, and estimating the Green-Yellow-Red zones to gauge what i think price action and support and resistance levels are telling me.

How to Use the Put-Call Ratio

There are several indicators that I use that are truly unique and helpful. The put/call ratio is one of those indicators that, on certain days, can give you a wealth of information and some insight into the market. Though I seldom use the put/call ratio as a primary indicator, I often use it to give me an overall view of what the traders are buying and selling. This kind of information is invaluable in ascertaining the overall mood and trend of the market.

There are three flavors of the put/call ratio:

1. The equity P/C ratio: This particular ratio is not terribly useful because it generally reflects what the retail buyers are doing and it is us biased toward the long side.
2. The Index P/C ratio: This ratio generally reflects what the institutional buyers are doing, which is hedging activity. This ratio will often reflect a bias towards put buying.
3. The Combined equity/index P/C ratio: This ratio is a combination of the first two ratios and gives a very accurate reflection of put buying versus call buying and is the put/call ratio you want to keep your eye on.

The mechanics of P/C ratios are fairly simple. The ratio is simply the number of individuals or institutions buying puts divided by the number of individuals or institutions buying calls. In essence, you get a unique insight into how many people are betting the market is going long and how many people are betting the market is going short. What better information could you have?

Generally speaking, a P/C ratio higher than 1.0 reflects a high degree of bullishness in the market and is good reason to ignore any potential short trades. As trend traders, you should also notice that the price action on the market indices should be trending upward since there will be an overwhelming number of buyers in the market, as opposed to sellers.

Conversely, I put to call ratio at.6 or lower indicates the wrong bearishness in the market and is good reason to ignore any potential long trades. Again, as trend traders you should also notice the price action on the market indices should be trending downward since there will be an overwhelming number of souls in the market, as opposed to buyers.

I would like to quickly note that the put/call ratio spends a tremendous amount of time in neutral territory and should be used when determining the strength of a trend in a given situation as opposed to a primary trading indicator.

As I said earlier in this article, I don't necessarily use the put/call ratio as the primary indicator in my trading. More importantly, the put/call ratio is an excellent tool to confirm a protracted or strong move either long or short, depending upon the reading. In other words, if the market is rallying I would prefer to have the market rally confirmed by the proper put to call ratio, and conversely if the market is breaking down, I would like to have that breakdown confirmed by the put call ratio.

Again, one of the basic premises of my trading which is convergence and divergence comes into play here. And if the market is in a weak rally and the put to call ratio does not confirm this rally with the reading of 1.0, there is good reason to believe that the rally is weakening or might reaching the end of the cycle. Just the opposite is true when evaluating a market breakdown and put/call ratio doesn't confirm the strength of the breakdown.

The P/C ratio is especially helpful in day to day trading, as opposed to intraday trading. It is important to know and understand the overall trend of the market and provide a perspective that is not short-term in nature. In other words, we use three minute charts to trade and a three-minute chart rally is, at best, a transient event and not indicative of overall longer-term market move. It's important to understand the overall trend of the market from several different perspectives and the P/C ratio is an excellent tool to help a trader understand what the general trend in the market is over a two or three day period.

So what is the significance of the put/call ratio? As a trader who is deeply interested in how the trend in the market is behaving I want to use every available tool at my disposal to gain a deeper and more complete understanding of what is actually occurring in the market. The put/call ratio gives me that understanding from a different perspective than any shorter-term indicator. It is important to understand that trends exist in longer period times than just a day and that is the exact use of the put/call ratio. Try it and see if it doesn't help you in your trend determination and give you a better overall look at how the market is functioning.

A Few Lessons For the New Stock Trader

Stock trading is much more of a business then your casual retirement account investing. Even though we all need to pay more attention to our long term investing to improve our returns if we don't treat our stock trading like any new enterprise we will quickly end up like the majority of new startups - bankrupt.

Every new business requires a business plan. If you don't have a set of rules that you abide for you are simply gambling your trading money away. It is both acceptable and encouraged to change or refine your rules, but at the moment of trade execution is not the time to do it. During trading hours you follow your rules as gospel, and after hours you can reflect and refine.

When you are first starting stock trading you will want to keep the plan simple. If you have to make too many calculations on the fly you'll make mistakes. Use round numbers of shares, one hundred is good, to start. Even if the trades are too small to make a large difference it's more important to see how well you execute, if the emotions of this strategy are too much, and how are you win/loss ratios than trade the perfect.

The next thing to learn is how to cut your losses quickly. Human instinct is to hold on because you were sure you were right. When you do sell you'll remember every stock that takes off every time you bail out, but you won't remember all the money you actually saved. Again, quit caring about emotions and bragging rights and focus on the business. If you hit your stop loss, sell. If you hit a situation that doesn't fit the plan and you don't understand, sell (and refine your plan.) If you have to leave for an emergency and can't manage your active trades, sell. Get the hint?

The last thing you must focus on when you're new is to reduce your choices. You'll be tempted to trade stocks, bonds, futures, FOREX, options, and who knows what else all at the same time. This is not advantageous because you won't be able learn any of them properly. You'll spend 1 minute of planning on each equity. You need time to really understand your plan and what happened in reality. Pick two or three of whatever your preference is to start and stay with them until you're bored and profitable. If you can't make one work now, drop it and choose another, but don't keep following it until you're more experienced.