If you are looking for day trading secrets then you have come to the right place. In this article I am going to give you some great information that is is sure to help you in your quest to become a better trader. Well without further ado here are my top 4 day trading secrets:
Dont trade after 12pm est.
The NYSE opens at 9:30 am eastern time and the bulk of action occurs within the first 2 hours of any session. Therefore if you want the best opportunity for profit then you need to be trading during this time. After the first couple of hours of trading market volatility and liquidity drop off considerably as most experienced traders exit the market. Not only does this mean less opportunity for profit but it also leaves the market more vulnerable to short term manipulation which can leave inexperienced traders with heavy losses. If you trade a market other than the U.S stock market then the same principle applies, only trade during the first 2 hours of the session.
The market always retraces.
Whenever there is a large move in the market you can bet your bottom dollar that the market will eventually retrace a portion of the move. This occurs becasue the people that have been in the move since the beginning start taking profit and also becasue of other traders that don’t think the move is sustainable begin to fade it. Both of these forces come together to push price back in the opposite direction of the move. So what does this mean for you day trading? It means that if you ever find yourself on the sidelines when a move occurs don’t fret over the missed opportunity for profit, instead just wait for the first sign that the move has run out of steam and then position yourself to trade the retracement
Only suckers trade the news.
There is no faster way to lose your money than trying to trade the news, and this is becasue of two reasons.For starters, you can’t predict the news so you have no way reliably positioning yourself before the news is released, and trust me listening to the analysts predictions on CNBC is no better than flipping a coin. Lastly, even if you were to guess correctly as to what the news will be there is no way you would then be able to predict how the market would react to it. Just becasue news is good doesn’t mean the market will go up and just becasue its bad doesn’t mean the market will go down. Oftentimes the market will react to surprising ways and many times it wont react at all and becasue of this it is a fools ambition to try to basing his trading around news releases. I’m sure you can get lucky and correctly predict what the news will be and how the market will react to it, but is that something that you can do day in and day out for any meaningful amount of time?
Always take profit.
While this may seem like common sense you would be surprised at how many new traders get this crucial point wrong. When you are in a trade and its in profit those are just paper profits, and what I mean by paper profits is that they are not real becasue you have not taken profit and therefore that money has not been deposited into your trading account. If the market for were to for whatever reason reverse direction all of your profits would be gone and you may even end up taking a loss. This is why its imperative that when you are in a trade and you have some good profits you need to bank them instead of holding on in the hope that the market will continue to move your way. This is probably the most important of all day trading secrets because at any time market conditions can change and what once was profit can quickly turn into a loss if you’re not careful.
So that’s it those are in my opinion the most important day trading secrets that new traders need to know. They are not all there is to know however as there are plenty of other little tidbits and pieces of information that will only come to you with time an experience. I’m still learning new things everyday myself in fact, the point of this article wasn’t to give you some magic day trading secrets that would turn you into a millionaire overnight, I’m afraid they don’t exist. I’m just trying to give you the information you need to become the best trader you can be. If I have helped you or you want to take issue with anything I have said then leave a comment in the box below.
By Jason Madison
