This is a good rule about Forex trading: The more volatility an individual market has, the better suited it is for short-term trading. To assess which stocks are better day trading vehicles, one way to calculate volatility is simply to divide its price by its average daily range. The lower this number, the more important it is for a trader to hold positions for longer periods of time in order to rise above the noise and overcome the spread between the bid/ask, plus commissions.
In the commodity markets, it would be silly to try to day trade corn. This market is best suited toward establishing a position either on a seasonal play or, perhaps, a technical breakout from a chart formation. However, in the S&P futures, for example, there are both sufficient volatility and enough intra-day swings for a trader to actually make a living day trading.
The big money is made on capturing the larger swings in any market. However, these types of opportunities only come along a few times a year. A good trader will make smaller scalp trades, constantly probing the market until the technicals line up for a play where bigger leverage can be used.
For newer traders, the best advice is to forget about the longer-term trades, place less emphasis on playing for higher-percentage returns and, instead, learn to trade on the shortest of time frames . Perhaps small scalps only while foregoing carrying positions home overnight. The smaller the account size, the less risk a trader should assume. The more time a trader has a position on, the more exposure they have to the markets and, thus, the greater the risk.
Also, execution skills will ultimately play a large role in a trader’s overall profitability. Constant practice getting in and out of the market, even if it means scratching many trades, is key. Only with practice will a trader learn to get the .feel. of placing his orders at just the right time. And, frankly, it is only after a trader has made numerous trades that there is a lessening of the emotions and anxieties that invariably go along with pulling the trigger. Perhaps this is why most of the more profitable traders have been on the trading floor at one time or another. Apit trader can make more than 500 trades a day, and quickly learns to ditch the losers for a small loss or scratch the trades that do not show an immediate gain. The best professionals are exceptionally good at playing defense.
In the commodity markets, it would be silly to try to day trade corn. This market is best suited toward establishing a position either on a seasonal play or, perhaps, a technical breakout from a chart formation. However, in the S&P futures, for example, there are both sufficient volatility and enough intra-day swings for a trader to actually make a living day trading.
The big money is made on capturing the larger swings in any market. However, these types of opportunities only come along a few times a year. A good trader will make smaller scalp trades, constantly probing the market until the technicals line up for a play where bigger leverage can be used.
For newer traders, the best advice is to forget about the longer-term trades, place less emphasis on playing for higher-percentage returns and, instead, learn to trade on the shortest of time frames . Perhaps small scalps only while foregoing carrying positions home overnight. The smaller the account size, the less risk a trader should assume. The more time a trader has a position on, the more exposure they have to the markets and, thus, the greater the risk.
Also, execution skills will ultimately play a large role in a trader’s overall profitability. Constant practice getting in and out of the market, even if it means scratching many trades, is key. Only with practice will a trader learn to get the .feel. of placing his orders at just the right time. And, frankly, it is only after a trader has made numerous trades that there is a lessening of the emotions and anxieties that invariably go along with pulling the trigger. Perhaps this is why most of the more profitable traders have been on the trading floor at one time or another. Apit trader can make more than 500 trades a day, and quickly learns to ditch the losers for a small loss or scratch the trades that do not show an immediate gain. The best professionals are exceptionally good at playing defense.
