A trader can measure their performance as a percentage of the trading channel width. The perfect trade would be buying at the bottom channel line and selling at the top channel line, which would be a 100% performance. If a trader captured one-half of the channel, it would be a 50% performance. The goal is to continually increase the performance percentage of the average winning trade.
Based on particular setups, any trading system can be used for the purposes of scalping. In this regard, scalping can be seen as a kind of risk management method. Basically, any trade can be turned into a scalp by taking a profit near the 1:1 risk/reward ratio. This means that the size of the profit taken equals the size of a stop dictated by the setup. If, for instance, a trader enters his or her position for a scalp trade at $20 with an initial stop at $19.90, the risk is 10 cents. This means a 1:1 risk/reward ratio will be reached at $20.10.
Individual traders often manage other people's money or simply trade with their own. Few of them have access to a trading desk, but they often have strong ties to a brokerage (due to the large amounts they spend on commissions) and access to other resources. However, the limited scope of these resources prevents them from competing directly with institutional day traders. Instead, they are forced to take more risks. Individual traders typically day trade using technical analysis and swing trades—combined with some leverage—to generate adequate profits on such small price movements in highly liquid stocks.
A stop-loss order is designed to limit losses on a position in a security. For long positions, a stop loss can be placed below a recent low, or for short positions, above a recent high. It can also be based on volatility. For example, if a stock price is moving about $0.05 a minute, then you may place a stop loss $0.15 away from your entry to give the price some space to fluctuate before it moves in your anticipated direction.
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.
Make a plan to trade this strategy in a Simulated Trading account for 1 month to test your skills. Your objects will be to achieve a percentage of success (or accuracy) of at least 60%. You also must maintain a profit loss ratio of at least 1:1 (winners are equal size on average as losers). If you can achieve these statistics, then you are positioned well to trade live. During the 1 month of practice, try to take 6 trades per day.
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.
Scalping highly liquid instruments for off-the-floor day traders involves taking quick profits while minimizing risk (loss exposure).[14] It applies technical analysis concepts such as over/under-bought, support and resistance zones as well as trendline, trading channel to enter the market at key points and take quick profits from small moves. The basic idea of scalping is to exploit the inefficiency of the market when volatility increases and the trading range expands. Scalpers also use the "fade" technique. When stock values suddenly rise, they short sell securities that seem overvalued.[15]
Day trading poses a number of hurdles. Mainly, each trading day is slightly different. Traders need a method that works in nearly all market conditions. That doesn't mean a day trader will win every day. On the contrary, even with a great method, there still may be several losing days a month. Winning every trade or every day isn't important, it is winning over the course of each week and month that matters.
Many swing traders assess trades on a risk/reward basis. By analyzing the chart of an asset they determine where they will enter, where they will place a stop loss, and then anticipate where they can get out with a profit. If they are risking $1 per share on a setup that could reasonably produce a $3 gain, that is a favorable risk/reward. On the other hand, risking $1 to make $1 or only make $0.75 isn't as favorable.

A scalp trader can look to make money in a variety of ways. One method is to have a set profit target amount per trade. This profit target should be relative to the price of the security and can range between .%1 - .25%. Another method is to track stocks breaking out to new intra-day highs or lows and utilizing Level II to capture as much profit as possible. This method requires an enormous amount of concentration and flawless order execution. Lastly, some scalp traders will follow the news and trade upcoming or current events that can cause increased volatility in a stock.
Based on particular setups, any trading system can be used for the purposes of scalping. In this regard, scalping can be seen as a kind of risk management method. Basically, any trade can be turned into a scalp by taking a profit near the 1:1 risk/reward ratio. This means that the size of the profit taken equals the size of a stop dictated by the setup. If, for instance, a trader enters his or her position for a scalp trade at $20 with an initial stop at $19.90, the risk is 10 cents. This means a 1:1 risk/reward ratio will be reached at $20.10.
Market data is necessary for day traders to be competitive. A real-time data feed requires paying fees to the respective stock exchanges, usually combined with the broker's charges; these fees are usually very low compared to the other costs of trading. The fees may be waived for promotional purposes or for customers meeting a minimum monthly volume of trades. Even a moderately active day trader can expect to meet these requirements, making the basic data feed essentially "free". In addition to the raw market data, some traders purchase more advanced data feeds that include historical data and features such as scanning large numbers of stocks in the live market for unusual activity. Complicated analysis and charting software are other popular additions. These types of systems can cost from tens to hundreds of dollars per month to access.[19]

Mutual funds are off-limits for intraday trading. The design of these funds is for the long-term investor, and they can only be bought and sold through a broker or the fund's investment company. Also, a mutual fund's price posts only once, at the close of the trading day. This price is known as the net asset value (NAV) and reflects all of the intraday movement of the fund's assets, less its liabilities, calculated on a per-share basis.


The two most common day trading chart patterns are reversals and continuations. Whilst the former indicates a trend will reverse once completed, the latter suggests the trend will continue to rise. Understanding these trading patterns, as well as ‘triangles’, ‘head and shoulders’, ‘cup and handle’, ‘wedges’ and plenty more, will all make you better informed when it comes to employing your trading strategies.
The reason is because all too often the price can drop and you will end up giving up that profit. Instead, as soon as I’ve reached my first profit target (if I’m risking $100, then as soon as I’m up $100), I’ll sell 1/2 my position and set my stop at breakeven. This method of scaling out ensures small profits on all trades that move in your favor, giving you a better percentage of success.
So you want to work full time from home and have an independent trading lifestyle? If so, you should know that turning part time trading into a profitable job with a liveable salary requires specialist tools and equipment to give you the necessary edge. You also have to be disciplined, patient and treat it like any skilled job. Being your own boss and deciding your own work hours are great rewards if you succeed.
Price action trading relies on technical analysis but does not rely on conventional indicators. These traders rely on a combination of price movement, chart patterns, volume, and other raw market data to gauge whether or not they should take a trade. This is seen as a "simplistic" and "minimalist" approach to trading but is not by any means easier than any other trading methodology. It requires a solid background in understanding how markets work and the core principles within a market, but the good thing about this type of methodology is it will work in virtually any market that exists (stocks, foreign exchange, futures, gold, oil, etc.).
Day trading was once an activity that was exclusive to financial firms and professional speculators. Many day traders are bank or investment firm employees working as specialists in equity investment and fund management. Day trading gained popularity after the deregulation of commissions in the United States in 1975, the advent of electronic trading platforms in the 1990s, and with the stock price volatility during the dot-com bubble.[2]
You need to understand basic day trading terminology & concepts to build your foundation. You can follow me on Youtube to get free education! Join the community of thousands of followers on YouTube and begin studying the free content we post on a daily basis. This is the beginning of your education. You need to study the markets, analyze charts, and learn the strategies professional traders are using every day.
The common use of buying on margin (using borrowed funds) amplifies gains and losses, such that substantial losses or gains can occur in a very short period of time. In addition, brokers usually allow bigger margin for day traders. In the United States for example, while the initial margin required to hold a stock position overnight are 50% of the stock's value due to Regulation T, many brokers allow pattern day trader accounts to use levels as low as 25% for intraday purchases. This means a day trader with the legal minimum $25,000 in his account can buy $100,000 (4x leverage) worth of stock during the day, as long as half of those positions are exited before the market close. Because of the high risk of margin use, and of other day trading practices, a day trader will often have to exit a losing position very quickly, in order to prevent a greater, unacceptable loss, or even a disastrous loss, much larger than her original investment, or even larger than her total assets.
Make a plan to trade this strategy in a Simulated Trading account for 1 month to test your skills. Your objects will be to achieve a percentage of success (or accuracy) of at least 60%. You also must maintain a profit loss ratio of at least 1:1 (winners are equal size on average as losers). If you can achieve these statistics, then you are positioned well to trade live. During the 1 month of practice, try to take 6 trades per day.
A scalp trader can look to make money in a variety of ways. One method is to have a set profit target amount per trade. This profit target should be relative to the price of the security and can range between .%1 - .25%. Another method is to track stocks breaking out to new intra-day highs or lows and utilizing Level II to capture as much profit as possible. This method requires an enormous amount of concentration and flawless order execution. Lastly, some scalp traders will follow the news and trade upcoming or current events that can cause increased volatility in a stock.

Market data is necessary for day traders to be competitive. A real-time data feed requires paying fees to the respective stock exchanges, usually combined with the broker's charges; these fees are usually very low compared to the other costs of trading. The fees may be waived for promotional purposes or for customers meeting a minimum monthly volume of trades. Even a moderately active day trader can expect to meet these requirements, making the basic data feed essentially "free". In addition to the raw market data, some traders purchase more advanced data feeds that include historical data and features such as scanning large numbers of stocks in the live market for unusual activity. Complicated analysis and charting software are other popular additions. These types of systems can cost from tens to hundreds of dollars per month to access.[19]


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.
The key to scalping while using short time frames is to identify price changes before the rest of the market has had the chance to act. You should also be willing to accept very low profit margins—gaining less than 1% on a given action will still usually be in your best interest. Because of this, many scalpers may implement tight stop-loss and stop-limit orders over time.  
Day traders are attuned to events that cause short-term market moves. Trading the news is a popular technique. Scheduled announcements such as economic statistics, corporate earnings or interest rates are subject to market expectations and market psychology. Markets react when those expectations are not met or are exceeded, usually with sudden, significant moves, which can benefit day traders.
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