Indepth Trading, Forex and Market Indication
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presents
Keys to Successful Day Trading
The market is an ever-changing entity, presenting us every day with different and unique scenarios. Nevertheless, the market is more or less a reflection of people's ideas and attitudes and while it is also true that no two people are alike, each and every one of us has something in common with someone else, whether it be the way we get out of bed in the morning or the foods we prefer to eat. Additionally, we tend to repeat actions such as preferring to brush our teeth at a certain time of day or making sure we try to catch the Thursday night prime time television shows. No matter which angle you look at it from, humans are creatures of habit and this tendency gets reflected in stock movement. It's what makes technical analysis a reliable and profitable way to trade.
Unfortunately, technical analysis is not always cut and dry. The same core pattern does not work the same in every market environment. For instance, one of the setups I often look for on a daily chart is a 3-5 day pullback in an up trending stock for buying opportunities. Where newer traders tend to get in trouble, however, is taking such a setup to mean that every time an up trending stock pulls back 3-5 days and then breaks the previous day's highs that means they enter long. In reality, there are always exceptions and it's learning what these are that can be the dividing line between those traders who are successful and those who fail. In this example, how a stocks pulls back in a primary uptrend as well as overall market conditions will greatly influence whether taking such a pullback as a long is really worth the risk to reward. In some cases it is not.
The ability to adjust to changing market circumstances is just one of the traits of a successful trader. In truth though, there are quite a few. Something that I've found helpful is taking the time to look at other successful traders and trying to identify characteristics that may have contributed to their success. In addition to being able to adapt there are about 8 more things I have observed which include the following:
1. They stay neutral;
2. They have a business plan;
3. They keep a journal;
4. They focus on 1 to 3 techniques that suit them well;
5. They are great money managers;
6. They are comfortable with risk and uncertainty;
7. They accept personal responsibility for all of their trading action; and
8. They use risk capital to trade.
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