The majority of traders are looking for entries with a very high probability of success. Web sites and book stores are loaded with day trading advice to fill this "need." Some of it's pretty good entry advice. A lot of it is average, which is actually not a good thing. But good or average, if they are leading you to believe that "If you can find better entries, you'd be making money." Than this is poor day trading advice, it's a lie and they are taking your money and they are taking you for a ride.
First of all and I know this will ruffle some feathers, I am not a big fan of demo trading accounts. I know some old time traders swear by them. But the way I look at it, is if you want to demo trade to understand how your platform works, how to place different types of orders etc, OK do it. But if you honestly believe that placing fake trades with fake money is teaching you anything of value well you are going to bust your account and likely sooner rather than later. Why you ask, well because when you're in a live trade and you have "real" money on the line you react much differently to being in a loss position than when it's play money. Oh I can assure you as strong willed as you think you are, when that first trade moves in a hurry against you and you see the loss mounting I don't care how experienced you are panic does start to set in. So how do you deal with this and all the other head games that the market plays on you?
If you're going to make it day trading the stock market, and actually be successful at it, you must understand why this is, and then you'll program your reflexes to follow your knowledge. Think of it this way...large corporations spend millions of dollars inventing boatloads of products that are worthless. But in the early stages of research and development, the company can't tell which products will make money. If they take all their new products to market, and only a few sell, the few won't offset the losers, and the company will go under.
Most new companies (about 95% by some estimates) fail. The same is true of traders, they want to be successful, but just don't know how to go about it, which day trading advice should they believe, and who's just trying to take their money. But there is an upside to all of this, successful companies know a secret. They find a way to identify their losers in the early stages... and close the projects down quickly before losing a lot of money in the marketing process.As James Surowiecki puts it in his book, "The Wisdom of Crowds"
On the subject of risk, day trading is almost unique in that it can be learnt and practised with absolutely no financial risk at all, by means of paper-trading - that is - trading using freely available simulation software. Thus in the same way a trainee airline pilot won't be let loose into the skies without having learnt and rehearsed their skills in a simulator, so a new trader can employ the same technique before they start trading real money. I "sim-traded" before I gave up the day-job; it made it easy to leave the safety-net of a monthly pay check knowing from my simulated trading sessions that I could already make money in the markets.
Most asked question number 3, what's the best system for trading? Well the best system for you is your system. Let that one sink in for a bit. There are as many systems out there as there are traders. They aren't all perfect and what works for you might not work for me or anything else. The one thing I can tell you, there is no holy grail of systems. They all can be used by just about anyone; they just all need the personal touch of the user. A system working for a week or two or eight does not making it a winning system. All systems have their good and bad points; none of them seem to work in all markets. There is so much to choose from between systems and how to use them I think I'm going to make that a topic for an entire newsletter all by itself. The bottom line about systems is to do what works for you, learn what you like. Do you like swing trading, scalping, intra day...whatever you like there will be a system you can buy to get you started down the right path while you figure out all the nuts and bolts.
First of all and I know this will ruffle some feathers, I am not a big fan of demo trading accounts. I know some old time traders swear by them. But the way I look at it, is if you want to demo trade to understand how your platform works, how to place different types of orders etc, OK do it. But if you honestly believe that placing fake trades with fake money is teaching you anything of value well you are going to bust your account and likely sooner rather than later. Why you ask, well because when you're in a live trade and you have "real" money on the line you react much differently to being in a loss position than when it's play money. Oh I can assure you as strong willed as you think you are, when that first trade moves in a hurry against you and you see the loss mounting I don't care how experienced you are panic does start to set in. So how do you deal with this and all the other head games that the market plays on you?
If you're going to make it day trading the stock market, and actually be successful at it, you must understand why this is, and then you'll program your reflexes to follow your knowledge. Think of it this way...large corporations spend millions of dollars inventing boatloads of products that are worthless. But in the early stages of research and development, the company can't tell which products will make money. If they take all their new products to market, and only a few sell, the few won't offset the losers, and the company will go under.
Most new companies (about 95% by some estimates) fail. The same is true of traders, they want to be successful, but just don't know how to go about it, which day trading advice should they believe, and who's just trying to take their money. But there is an upside to all of this, successful companies know a secret. They find a way to identify their losers in the early stages... and close the projects down quickly before losing a lot of money in the marketing process.As James Surowiecki puts it in his book, "The Wisdom of Crowds"
On the subject of risk, day trading is almost unique in that it can be learnt and practised with absolutely no financial risk at all, by means of paper-trading - that is - trading using freely available simulation software. Thus in the same way a trainee airline pilot won't be let loose into the skies without having learnt and rehearsed their skills in a simulator, so a new trader can employ the same technique before they start trading real money. I "sim-traded" before I gave up the day-job; it made it easy to leave the safety-net of a monthly pay check knowing from my simulated trading sessions that I could already make money in the markets.
Most asked question number 3, what's the best system for trading? Well the best system for you is your system. Let that one sink in for a bit. There are as many systems out there as there are traders. They aren't all perfect and what works for you might not work for me or anything else. The one thing I can tell you, there is no holy grail of systems. They all can be used by just about anyone; they just all need the personal touch of the user. A system working for a week or two or eight does not making it a winning system. All systems have their good and bad points; none of them seem to work in all markets. There is so much to choose from between systems and how to use them I think I'm going to make that a topic for an entire newsletter all by itself. The bottom line about systems is to do what works for you, learn what you like. Do you like swing trading, scalping, intra day...whatever you like there will be a system you can buy to get you started down the right path while you figure out all the nuts and bolts.
About the Author:
Frank Miller has a Debt Consolidation Blog & Finance, these are some of the articles: Buying Gold IRA In Your Retirement Planning You have full permission to reprint this article provided this box is kept unchanged.
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