Many professional money managers and financial advisors shy away from day trading arguing that, in most cases, the reward does not justify the risk. Conversely, those who do day trade insist there is profit to be made. Day trading profitably is possible, but the success rate is inherently lower because of the complexity and necessary risk of day trading in conjunction with the related scams. Moreover, economists and financial practitioners alike argue that over long time periods, active trading strategies tend to underperform a more basic passive index strategy, especially after fees and taxes are taken into account.
The bid–ask spread is two sides of the same coin. The spread can be viewed as trading bonuses or costs according to different parties and different strategies. On one hand, traders who do NOT wish to queue their order, instead paying the market price, pay the spreads (costs). On the other hand, traders who wish to queue and wait for execution receive the spreads (bonuses). Some day trading strategies attempt to capture the spread as additional, or even the only, profits for successful trades.[18]
ECNs and exchanges are usually known to traders by a three- or four-letter designators, which identify the ECN or exchange on Level II stock screens. The first of these was Instinet (or "inet"), which was founded in 1969 as a way for major institutions to bypass the increasingly cumbersome and expensive NYSE, and to allow them to trade during hours when the exchanges were closed.[6] Early ECNs such as Instinet were very unfriendly to small investors, because they tended to give large institutions better prices than were available to the public. This resulted in a fragmented and sometimes illiquid market.
Trading: Spotting the trend and momentum comes in handy for a scalper who can even enter and exit briefly to repeat a pattern. A novice needs to understand the market pulse, and once the scalper has identified that, trend trading and momentum trading can help achieve more profitable trades. Another strategy used by scalpers is countertrend. But beginners should avoid using this strategy and stick to trading with the trend.
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If the strategy is within your risk limit, then testing begins. Manually go through historical charts to find your entries, noting whether your stop loss or target would have been hit. Paper trade in this way for at least 50 to 100 trades, noting whether the strategy was profitable and if it meets your expectations. If it does, proceed to trading the strategy in a demo account in real time. If it's profitable over the course of two months or more in a simulated environment, proceed with day trading the strategy with real capital. If the strategy isn't profitable, start over.
There is a commonly quoted statistic that only about 5 percent of day traders succeed. This is a good approximation. Most people who try day trading will not succeed, yet most of them do not practice everyday for six months to a year either. Time investment and quality practice increase a day traders chances of being in the 5 percent that are successful.
Most of our students adopt either my Momentum or Reversal Day Trading Strategies. Once you choose the one that is a good match for your skill level, your risk management tolerance, and the time of day you plan to trade, you are ready to get started. Students in our Day Trading Course can download our written trading plan documents and I’m able to actually oversee them while they are trading.
The goal of swing trading is to identify the overall trend and then capture gains with swing trading within that trend. Technical Analysis is often used to help traders take advantage of the current trend in a security and hopefully improve their trades. Day trading and swing trading involve specific risks and commission costs that are different and higher than the typical investment strategies.

If the market is trending down, they would short securities that exhibit weakness when their prices bounce. Most independent day traders have short days, working two to five hours per day. Often they will practice making simulated trades for several months before beginning to make live trades. They track their successes and failures versus the market, aiming to learn by experience.
To offset this, day traders are often offered the "opportunity" to leverage their portfolios with more margin, four times the buying power rather than double. Taking larger leveraged positions can increase percentage gains to offset costs. The problem is that no one is right all the time. A lack of focus, discipline, or just plain bad luck can lead to a trade that goes against you in a big way. A bad trade, or string of bad trades, can blow up your account, where the loss to the portfolio is so great the chances of recovery are slim. For a swing trader, a string of losses or a big loss can still have a dramatic effect, but the lower leverage reduces the likelihood that the results wipe out your portfolio.
Risk management - Rather than looking for one big trade, the way a trend trader might, the scalper looks for hundreds of small profits throughout the day. In this process the scalper might also take hundreds of small losses during the same time period. For this reason a scalper must have very strict risk management never allowing a loss to accumulate.
Scalping is a fast-paced activity for nimble traders. It requires precision timing and execution. Scalpers use day trading buying power of four to one margin to maximize profits with the most shares in the shortest amount of holding time. This requires focusing on the smaller time frame interval charts such as the one-minute and five-minute candlestick charts. Momentum indicators such as stochastic, moving average convergence divergence (MACD) and relative strength index (RSI) are commonly used. Price chart indicators such as moving averages, Bollinger bands and pivot points are used as reference points for price support and resistance levels.
The swing trader, therefore, is best positioned when markets are going nowhere – when indexes rise for a couple of days, then decline for the next few days, only to repeat the same general pattern again and again. A couple of months might pass with major stocks and indexes roughly at the same place as their original levels, but the swing trader has had many opportunities to catch the short-term movements up and down (sometimes within a channel).

There are two primary divisions of professional day traders: those who work alone and/or those who work for a larger institution. Most day traders who trade for a living work for a large institution. These traders have an advantage because they have access to a direct line, a trading desk, large amounts of capital and leverage, expensive analytical software, and much more. These traders are typically looking for easy profits that can be made from arbitrage opportunities and news events, and these resources allow them to capitalize on these less risky day trades before individual traders can react.
Trading: Spotting the trend and momentum comes in handy for a scalper who can even enter and exit briefly to repeat a pattern. A novice needs to understand the market pulse, and once the scalper has identified that, trend trading and momentum trading can help achieve more profitable trades. Another strategy used by scalpers is countertrend. But beginners should avoid using this strategy and stick to trading with the trend.
Scalping is a trading style that specializes in profiting off small price changes, generally after a trade is executed and becomes profitable. It requires a trader to have a strict exit strategy because one large loss could eliminate the many small gains the trader worked to obtain. Having the right tools such as a live feed, a direct-access broker and the stamina to place many trades is required for this strategy to be successful.

By aggressively trading on margin he can produce 5% daily profits on the 100k buying power he will grow their 25k cash at the rate of 20% per day. The risk of course is that he will make a mistake that will cost him everything. Unfortunately, this is the fate of 9 out of 10 traders. The cause of these career ending mistakes is a failure to manage risk.
Another risk of swing trading is that sudden reversals can create losing positions. Because you are not trading all throughout the day, it can be easy to be caught off guard if price trends do not play out as planned. To decrease the risk of this happening, we recommend issuing stop orders with every new position. Stop orders can help you “lock-in” your gains and can also help you cut your losses.
A scalper intends to take as many small profits as possible, without letting them evaporate. This is the opposite of the "let your profits run" mindset, which attempts to optimize positive trading results by increasing the size of winning trades while letting others reverse. Scalping achieves results by increasing the number of winners and sacrificing the size of the wins. It's not uncommon for a trader with a longer time frame to achieve positive results by winning only half or even less of his or her trades – it's just that the wins are much bigger than the losses. A successful scalper, however, will have a much higher ratio of winning trades versus losing ones, while keeping profits roughly equal or slightly bigger than losses.

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Since it is unknown how many days or weeks a pullback or counter trend may last, you should enter a bullish swing trade only after it appears that the stock has resumed the original uptrend. One way this is determined is to isolate the counter trend move. If the stock trades higher than the pullback’s previous day’s high, the swing trader could enter the trade after performing a risk analysis. This possible point of entry is known as the “entry point.” This should be examined against two other price points to assess risk and determine your upside target.
When it comes to intraday trading, daily charts are the most commonly used charts that represent the price movements on a one-day interval. These charts are a popular intraday trading technique and help illustrate the movement of the prices between the opening bell and closing of the daily trading session. There are several methods in which intraday charts can be used. Know about some of the most commonly used chart.
Although day trading has become somewhat of a controversial phenomenon, it can be a viable way to earn profit. Day traders, both institutional and individual, play an important role in the marketplace by keeping the markets efficient and liquid. While popular among inexperienced traders, it should be left primarily to those with the skills and resources needed to succeed.
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