Monday, April 9, 2012

Day Trading requires consistency

There is a big difference between day trading and other forms of trading like swing trading, position trading or active investing. The difference arises from the time frames used in day trading. All trades are cumpulsorily closed by a day trader, at the end of the trading session. Therefore, the day trader does not have the luxury of time. He cannot say to himself - ok, the trade is not working out, so let me wait. This is not possible because the trader is under a cumpulsion to end the trade by a certain time. So he cannot wait to find out if his trade is going to work out with more profits, or less losses.

My point is: day traders must be tuned to take profits at some point during the day. They must have sensible guidelines to exit. Day traders should therefore use profit targets, reversal patterns to close the trade. They should not continue with the trade hoping for more and more, because time is against them.

3 comments:

Balu said...

Sir

Also one more important point to note is you get both intraday buy and sell signals in any short term trend up or down. But intraday positions against short term trend will only give pain. I observed you also in recent weeks recommended intraday positions only in the short term trend direction. So the only difference I see between intraday and swing trading is managing pullbacks within a given trend.

Regards
Balu

Dinesh Rishi said...

Failed short term trades
become
long term investment

So before trading it
rules must be clear

Intraday trader must go home clean
slate.

Rushabh Shastri said...

To make trading simple- identify any single instrument with the trend strictly to trade in ie. buy on dips or sell or rise.....
if making it examplified BUY ON DIPS nifty till it closes above 200 DMA ....even one thing that 5370 was a good point to short have a discipline to wait till 5200/5250 to have BUY ON DIPS trade...that discipline will help to reduce the err.To much jumping will with too much stock in track will create confusion nothing else. P.S. all have eyes on BANKs but it seems that RELIANCE -FORGOTTEN HERO trying hard to come in picture again.