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Improve Your Day Trading Results
By plrprousers | April 13, 2010
Anyone who is a short term trader uses price charts all the time. They normally use a timeframe spanning from tick based (bars based on number of trades that happen rather than time) to maybe 10 minute charts. They watch the charts and look for selling and buying patterns in the price action to figure out a low risk entry point. Since these types of traders are solely focused on the near term action, they are only in a position for a few minutes, and perhaps a few hours at most.
One thing a lot of people who are day trading fail to look at is the longer time frames since they are not trading them. They might be concentrating on a 5 minute chart, which looks long, but fail to realize that the 30 minute chart is near a resistance point and in a big downtrend. They go long because the chart setup looked good, but end up losing because the higher time frame is what is guiding the price. Because short term trading is purely an odds game, no matter the skill of the trader some of them are just not going to work. But if a short term trader were to take a look at the higher time frame charts prior to putting a trade on, it would filter out some of the higher risk trades that might will turn into a losing trade. At the very least, it would guide your profit targets and stops, which would also improve your overall results.
All forms of trading involve risk, and in the end it just comes down to how good the trader is at putting the odds in their favor. Becoming a day trader is not for everyone, but the high level of daily action often excites people into giving it a shot who should not be risking their hard earned money. Traders need to just keep the higher time frames in focus when they are learning day trading, and the end results should improve a decent amount. This keeps you trading in the direction of the primary, longer term trend, and when you choose to go against that you can tailor your stops and targets accordingly.
Tags:day trade,Day Trading,Day Trading Robot,investing,long term investing,stock market,Stock Trading,swing trade,swing tradingRelated posts
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