Article Advise

submitted: Sep 4th 2008 | by: Dr.BarryBurns | Total views: 1 | Word Count: 534 | |

Day trading can be an enjoyable way to make money. But it's not as easy as most people think. Here are some day trading tips that can aid the beginner and the more experienced trader to help you reach your goals faster.

Tip #1: Do not over trade. The market is a random walk most of the time, meaning that it's moving around without a pattern that can forecasted. Retail traders taking small positions in the market cause this meaningless movement.

These amateurs do not affect the long-term movement of the market. The professionals, with their large volume and their willingness to hold positions longer, are the ones who create sustainable moves in the market that can provide meaningful profits.

Many traders are lured to day trading because of the energy of the business and the potential for big profits. This mindset is not helpful. The pros keep their powder dry for long periods of time waiting for a high-probability situation to happen. They are much less active than beginners think.

Second: The trend is your friend ... sometimes.

The truth is that the trend is a fair weather friend!

It is your friend early on. But trends get "tired" and eventually end. So the full axiom is actually, "The trend is your friend, until the end."

Therefore there are 2 times to trade when you can put statistics on your side:

At the very beginning of a trend.

When a trend is getting "tired."

Trading at these two times lets you put the "edge" of the bell curve on your side. Trading mid-trend, puts you in the middle of the bell curve where the outcome is completely unpredictable.

Third: Listen to free chat rooms for day trading tips and do exactly the opposite!

The benefit of chat rooms is often not found in listening to the moderator. It comes from listening to the comments of the participants as they reveal what trades they are taking.

As you may guess, the majority of the time they are completely misguided in their approach.

They represent the collective voice of the unprofitable masses. It's uncanny how all the amateurs think alike when it comes to analyzing the markets. If you follow them in the chat rooms long enough you'll pick up on the patterns of the things they do wrong over and over. Then you'll learn to do the opposite and win.

As an example, one of the most common problems amateur traders have, is resisting the urge to fight the trend. You'll often hear comments such as: "The market can't go any higher than this." "This market just has to turn around at this point." "The market is definitely way over-extended now."

It seems to be hard wired into the brains of retail day traders to trade against the prevailing energy of the markets and try to find the top or bottom. You can make a lot of money trading against them and doing exactly the opposite.

Day trading can be very profitable, but to succeed you must not align yourself with the masses. You must avoid the herd instinct that drives the losers. Use these 3 day trading tips to help you on your journey toward being one of the minority who succeeds.

About the Author

Dr. Barry Burns is the president of Top Dog Trading, operates a day trading blog and offers a free 5-day video course which provides day trading tips. He has spoken at DayTradersUSA, "Elite Masters of Trading," and Traders Expos.

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