Prepare for day trading like a pro
Plan your trades and trade your plans. The first step in a “Trading Like a Pro” day is preparation. It includes financial instruments for trading and best entry strategies, trade management, risk control and money management. No serious day trader would enter a trade without checking the economic news first. It is important to know the time and day of all major business news before considering a trade. Only careless traders ignore economic news. You can check Economics on Yahoo / Finance, Google / Finance, and MSN / Money. You then decide what to trade based on fundamentals or technical analysis.
As a day trader, you will honor the London opening bell at 3 a.m. Eastern time, 8 a.m. London time and the New York opening bell at 9:30 a.m. Eastern time, 2:30 p.m. London time. You will be waiting for the opening bell before placing any trades. After preparation, there are eight steps to a “Trade like a Pro” day.
The first step after preparing for day trading: the 5% rule
It is important to understand early on that day trading involves risks. No trading decision is risk-free and contains some elements of risk. Traders must protect their trading capital at all costs. A simple rule of money management and risk control is to use only five percent of your trading account. If you open five trades, the total amount allotted for those five trades cannot exceed five percent of your trading account. When you reach five cents, stop trading.
Second step in day trading like a pro
Very often traders trade during the London session, the New York session and the Asian session. It is common to miss a good night’s sleep and act without a break. The main problem in this case is over-trade. For every trade, traders have to pay their fees to their broker in the form of a commission. It is important to control the number of trades to avoid paying too many commissions. To avoid making useless trades for the pleasure of trading, traders should always ask this question: is it worth being in this trade? The expected return must be at least twice the risk. The risk / reward ratio should always be considered before entering a trade.
The third step in day trading like a pro
If you buy or sell when the time to buy or sell in the right place, that’s a win. On the other hand, if you sell or buy at the wrong time and place, it is a loss. The ability to make excellent decisions quickly and to decipher the language of the price or momentum indicator enables the day trader to act like a pro. Day trading is a serious competition, similar to American football or rugby. When one buys, the other sells. Hence, one should use the right strategy for each trading challenge. Use trending strategies during trending periods and range trading strategies during periods of low volatility.
Fourth step in day trading like a pro
Using Indicators in Day Trading One of the reasons why traders fail in day trading is because they misuse or misunderstand indicators. Many indicators simply repeat price patterns. They even have different pricing versions. No indicator can replace price, indicator number one.
The price is the universal language of all dealers and has nothing to hide. Traders should open their eyes wide and try to understand what the price is giving away. There are many indicators, but the price remains the same. The best approach to day trading like a pro is to look at the price first before looking at the indicators. Next, take a look at the price before getting into the trade.
It is important for traders to learn to be proficient in each indicator they use and to be fluent in the language of prices. If you had to sell every overbought Slow Stochastic and buy every oversold Slow Stochastic, the market would never be trending. The abuse of the Slow Stochastic has caused traders more losses than any other indicator. Day trading is different from gambling and gambling is different from day trading like a pro.
Please act like a pro or learn to act like a pro.
Step five in day trading like a pro
Understanding stable data in the market
“Data the stable is the truth, it is the constant. Stable data is something that stays intact even in a chaotic environment.”
There is a lot of stable data a on the market. Fibonacci retracements and projections, Elliott wave theory, higher time frames all control lower time frames, market patterns (not chart patterns), and more.