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Novice Daytrading - Answers
1) I would really like to see the "average day" (if there is such a thing) that a day trader experiences, as well as learn some things that can only be learned by watching.
3) How much does each trade cost the daytrader in terms of commission.
Try to go with someone that offers electronic trading such as LeoWeb. Much easier to get your trades ready and then when you decide to make the trade you just push a button. When phoning you must push the quick dial, wait for broker to answer the phone, say your order (mistakes in ordering can be very costly), wait while your order is placed, then broker gives you your fill. When you need to change your position such as moving a stop loss, or want to exit the trade, you again pick up the phone... Electronic order submission is simpler and more efficient once you become familiar with the process.
You will, however, want to make sure you can phone in your orders in case of Internet outages and the like. Review our Trade Management e-mail for a list of pros and cons to each method of order execution.
4) What exactly is day trading?
Effective day trading consists of a combination of the following factors:
Technical analysis is not difficult to learn. Start with a good book and just read about it. This will give you an understanding of what is involved and whether day trading might be something you would like. There are many excellent books available. We've listed our favorites in our Daytraders Bookstore. Think of your books as your tuition. When you find a book that looks like a good fit, buy it.
For instance, you want to know whether the market is in a trend and if so, which direction, up, down. Congestion is when the market is not presently trending but is moving in a sideways direction. To determine trend place trendlines on a chart. Start with the charts that come in your daily newspaper.
A trendline is simply a line connecting the most recent highs or lows. A good trendline will require at least two points, and three or more is better. The line must be straight, it cannot bend or twist. Here is a simple chart with a long-term up trendline and a mid-term down trendline. Notice how they connect either the highs or the lows?
Why do you want to know the direction of the overall trend? Because once you know the general trend direction, say for the last week or several months as in our example chart, you can then decide to take trades only in the direction of the trend. If the trend is up you'll take signals to buy but leave alone signals to sell.
After you read and understand some basics about technical analysis you'll need to study good, sound money management techniques. These have to do with determining your risk tolerance (based on the size of your account). Money management in trading means how well you handle your trades. Do you follow your rules and exit losing positions immediately?
Many traders fail simply because they refuse to accept that they have made a mistake and won't exit a loser, or worse, they hope the market will turn back in their favor. You'll also likely have a target for each trade, i.e. that point at which you'll exit the trade and take your profits or begin scaling back the trade, if you have more than one contract. This, again, is best learned by reading sound money management principals and then putting them into action in your own trading.
It may seem daunting at first, but it is not difficult to learn to trade. What is difficult is being able to take trades without getting emotionally involved in the outcome. The psychological issues including general fears such as a "fear of failure," or "fear of loss," are not easily overcome, but they can be dealt with and they can be controlled. Review our Tips, Tricks and Techniques sections for much more information about all areas of trading.
7) How difficult is it to trade intraday?
You don't have time to pay attention to the multitude of advice out there (which in my opinion, is a good thing). Individuals that position trade (hold for long periods, or simply buy and hold on for dear life) can take their time to make a decision to buy. They can think it over, read reports, and get a nice comfy feel for their decision. Day traders are rarely comfortable and must simply take action, quickly and decisively.
If you don't like to make decisions, stay away from day trading. It has been likened to a battlefield where you must react to the enemy, or lose your life (or money).
8) If I follow good guidelines, have the right personality, and constantly educate myself and discipline myself and don't get greedy,do you think I, or anyone for that matter,can earn a good living doing this?
Personality is very important and education never ends. Invest in yourself constantly by reading and studying. Trading is exciting and can be very profitable. Discipline is key, and if you can learn to follow your rules and have a winning system to follow, you will likely succeed.
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