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5 Useful Things You Should Know About Day Trading:
- It is not inevitable that you will loose money day trading, but you will need help from your computer. Markets
are not random and they are not predictable. If you think you
have detected a pattern for your trading system, you are wrong. Others who day trade online are using
very sophisticated trading system software to gain an edge. It is very unlikely
that you can make a profit without using the best daytrade software tools available.
- Most companies that sell day trading software (or offer courses for you to learn day trading) cannot be trusted. There
are tricks that can be used to deceive the average user of daytrading
software. For
example, curve fitting is used for a single market in a single time
frame in place of sound technical analysis. As long as a market
does not change in its trading
characteristics, their method of trading appears to work. But,
their trading indicator
cannot be applied to other markets and it may not work in other time
periods. If someone offers only futures trading software that
will not work with all commodity trading, it suggests that they have
not discovered fundamental truths about the nature of markets.
Another trick is to change a buy or sell day trading indicator signal
after
the fact. In other words, their day trade software does not work
in real time; it only
works in back testing! And watch out for a money back guarantee
offered for your learning to daytrade:
you will be required to carry out very complex tasks within 30 days
which will prove to be impossible: oh, sorry, you missed the cut-off
date for a refund!
- Trading software is completely worthless if it only works some of the time. The only thing that makes a trading system work is confidence.
You need confidence in order to take the next trade. Anyone who
thinks that they will be in the market with the correct position 100%
of the time is delusional. You can make a profit trading even if
your accuracy falls slightly below 50% by cutting your losses short and
holding your profitable position longer. In order to do this you
need good indicators of true market support and true market resistance and you need
confidence that three or four loosing trades in a row will be followed
by winning trades. So, you should use software that can
demonstrate a good reflection of true market fundamentals.
- To day trade, you
must either make a small profit by scalping or a larger profit by
following trends. Following counter trends or following market news is not going to work. Scalping
may be the only way to profit during a period of narrow range
consolidation, but it has a greater risk than following trends and it
has a smaller reward. Following counter trends is little more
than guesing with the only likely winner being the broker getting his
commission! Following the news seems like the most logical tool
to use in learning to daytrade, but it never seems to work. There
may be good news and the market goes down because it was already
expected and thus factored into the prices!
- Once you are
profitable at day trading, you can improve your performance slightly by
improving your skills, but the only way to increase your performance
greatly is to use an intelligent form of money management. The
first step is to be profitable. The second step is to examine
your method of trading to be sure that you have confidence. If
you are not profitable or you are not confident, work on your
skills now. Once you are profitable, intelligent money management
is to day trading as compound interest is to your bank savings account.
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