subject: Day Trading Strategy - Conquer the Stock Market [print this page] Day Trading Strategy - Conquer the Stock Market
Day Trading is a quick way of making money on the stock market. (But for many day traders, it is a quick of losing money!) It is also relatively less risky than a long/medium term investment in the stock market. But then why is it that many day traders have been losing rather than making money in the stock market? The reason is that they have had no strategy - an effective strategy that is. Day trading is not a game. It is a means of making money. After all, it is a trade, as the name itself suggests. And you will agree that any business without a strategy is more often likely to end up in losses sooner than later.
So what is the Day Trading strategy I am talking about? A strategy is an action plan. It is a set of action steps in response to a variety of situations. We all use strategies, mostly at an unconscious level, but since these are born out of desperation and fear, rather than out of a resolve to encounter a situation and come on top of it, they fall flat on crucial occasions pushing us into a quagmire from which we find it difficult to extricate ourselves from.
Based on my own experience as a Day Trader, I have found the following Day Trading Strategy elements useful:
1) You should start with a small capital, something you can afford to lose, if the worst happens. If you are starting with say $500, $100 or even $50, it means that at the worst you would lose that amount, not a penny more. If you are not going to be broke by losing this $50 or $100, it is fine!
2) There should be a method of collecting and analyzing stock price movements in a simple and fast way and deciding when to enter and when to quit. This is the plan.
3) You should set up stop loss limits and curtail the tendency to wait for some more time, expecting things to improve or miracles to happen. Miracles happen with more frequency in stock price movement than in other aspects of life, but you can't bank on it. Quit and book the loss at the predetermined level.
4) Never regret your decision when you find that you could have ... Hindsight is the least helpful in stock trading. It will be wonderful if we can trade retrospectively after observing the stock movement but then every one will be a winner and there will be no losers to pay the winner.
5) Learn from your mistakes and change the keep changing your methods based on what you had learnt. Only fools will keep repeating the mistakes.
6) If you find that your intuition proves correct, more often than not, listen to your inner voice - especially when there are warnings!
Parthasarathy Rengaswami is an 'internet explorer!' with an open but probing mind. He specializes in helping people find solutions to various problems through the net. He specializes in product review - especially products offered by the net. As a part of his research, he has bought and tried several products with the main objective of evaluating them and recommending them with confidence and honesty.
