There are many day trading strategies you can use to trade the forex market with. Strategies like scalping on 5 minute charts, trading breakouts, and relying on indicators are among the various strategies available too day trade forex with. There are literally hundreds of other strategies you can use as well, the hard part is finding one that works effectively and that you can learn without much confusion or frustration. The easiest and fastest way to learn a great day trading strategy is to learn one that has been used by a professional day trader to achieve consistent profits for a significant period of time. There is no sense in spending countless hours banging your head against your keyboard trying to invent a new trading method when there are already numerous ones in use by professional traders and mentors who are willing to teach you their own highly effective trading strategy.

The best way to learn how to effectively profit as a forex day trader is to get direct instruction from a forex trading mentor. If you go about learning how to day trade without the help of an experienced and professional trading mentor you will no doubt lose a lot of money in the process and experience significant amounts of confusion and frustration. A trusted trading mentor brings years of experience in using a consistently profitable trading strategy to profit in the markets. You can skip over almost all of the trial and error that generally goes along with finding or developing a profitable day trading strategy by obtaining instruction from a professional.

A good live trading room will allow access to the head traders trading screen and you will be able to see the trades they are taking in real time, as the trades setup and unfold. This is the most efficient and effective way to spend your time learning to day trade forex. Trading forex in a live forex trading room can be full of frustrating situations that you cannot foresee until you actually start trading. You can avoid most of these unforeseen frustrations, which usually lead to losing money, by learning a high quality strategy from a qualified and trusted professional day trader.

There is absolutely no substitute for being able to virtually look over a professional day trader’s shoulder as he or she explains what they are doing and the concepts behind their specific day trading strategies. You are getting a window into the brain of a professional day trader when you learn from a professional day trading mentor in a live forex day trading room. If you wish to set out on the proper path towards fulltime forex day trading success than it is highly advised you learn a profitable trading strategy from a highly qualified professional day trader that shows you their own personal trading screen and explains their strategies in real time trading situations. This is really the only way to ensure that you don’t lose thousands of dollars by making all the common trading mistakes that nearly every trader makes when attempting to learn how to day trade on their own.

Author: Sterling S
Article Source: EzineArticles.com
Provided by: Programmable Multi-cooker

Day trading has become a popular vehicle for (attempting to) create or maintain wealth. Every single day, thousands of new Day Traders emerge from the sidelines, primed and ready for action. They eagerly seek to learn day trading success strategies used by the Master Traders.

However, when a new or a struggling day trader begins to investigate and explore the world of Trading, in an effort to make their own dramatic entrance or to improve on their results, they are confronted by a world full of seemingly insurmountable challenges and obstacles.

But these new and/or struggling Traders don’t realize that MOST of these obstacles are myths.

And because they fail to recognize this, these new or struggling Traders typically fall prey to one of the 5 Great Myths of Trading:

1. Day Trading always requires massive capital accounts, both to learn, and then to execute a Day Trading Strategy.

It is true that in many cases you do need massive capital up front in order to step into the Trading arena, depending on where you learn trading, and what investment vehicle you choose to trade. But it certainly doesn’t HAVE to be.

In fact, it’s possible to secure an excellent Trading education AND fund a trading account with as little as $3000.

This is a little known fact among newbie Traders – they assume they’ll need to have at least $25,000 to open a trading account, on top of the $10,000+ they paid an “expert” to learn a trading system.

2. Day Trading always requires countless hours spent chained to your computer, staring at stock charts.

The stereotype of a Day Trader is someone who spends ALL DAY LONG glued to their computer screens, staring at stock charts, waiting for indicators to tell them its time to make a move.

And in large part, this stereotype is justified, because this is true of most Traders. These Day Traders will literally spend HOURS, if not ALL DAY LONG at their computers trading.

They use Trading as a means to escape the corporate rat race… only to find themselves in a J-O-B of their own creation.

But it doesn’t have to be this way. In fact, it is entirely possible to be an incredibly efficient and successful Trader while trading for just a few minutes a day – if you know how.

3. It takes months (or even longer) to learn and fully grasp a “successful” day trading strategy

Like the other myths, this one CAN be true, and IS true of many (most?) traders. The reason for this is most traders use technical trading systems and strategies.

The primary problem with these technically strategies is actually the topic of Myth #4 (to follow) – but suffice it to say that technical trading systems will take months to learn, and involved hundreds if not THOUSANDS of “practice trades” before you can possibly be ready to start trading “live” (i.e. with real money).

And when you DO go “live”, that doesn’t mean that you’ve fully grasped the trading strategy. In fact, it will be months or even years after going “live” before you likely have a firm handle on your technical trading strategy or system.

But like the other Great Trading Myths, it doesn’t HAVE to be this way.

In fact, it is possible to learn certain trading strategies and be ready to successfully implement them in a matter of weeks, or even DAYS.

If you know what these ultra-efficient strategies are, and where to find them.

4. You need a PhD in Advanced Statistical Theory in order to trade successfully.

This myth is a little bit “tongue in cheek”, but you no doubt understand the concept here. Many day traders typically employ a Technical trading style, which involved the use of statistical probability formulas and other highly complex technical indicators.

New traders see the level of complexity often involved with technical trading or “trend trading”, and are so intimidated by it that it keeps them from ever trying learn day trading.

Also, most people who try to learn technical analysis will struggle and eventually fail, because it IS so complex, and the technical indicators can often be very ambiguous.

The extreme complexity of technical trading systems may be the single biggest factor that prevents new traders from entering the Trading Arena.

5. You don’t need to learn how to trade from a professional – you can just teach yourself.

Of all of the 5 Great Trading Myths, this one runs the most rampant, and is responsible for destroying the overwhelming majority of trading accounts.

If there is one thing that new Traders need to understand, and that struggling or failed Traders understand all to well, it’s this:

You are going to have to pay for your trading education, one way or another. You can either pay to learn how to trade from a Professional, OR you can pay the Market.

And the market is a much more cruel, and a much more expensive instructor than nearly any Trading professional that will teach you how to trade.

Those Traders who want to try to “figure out how to trade” all on their own, with maybe the help of a book or two, will quickly discover that this is absolutely true.

The Market loves to dine on the trading accounts of inexperienced and uneducated day traders. Don’t let YOUR trading account become an afternoon snack for the Market.

When you are finally ready to learn day trading, explore the various options available to you before settling on any specific day trading system or strategy.

Author: Christopher Call
Article Source: EzineArticles.com
Provided by: Electric Pressure Cooker

Day trading the forex market can be a fast paced and exhilarating way to make a living. However, there are risks involved and so it is best to learn how to day trade forex from an experienced forex day trader. There are many different styles of day trading or “scalping” as some call it, however, not all are effective over the long run, so it is crucial you learn how to day trade currency from someone who has already spent the time, energy, and money into learning an effective and highly profitable strategy for scalping the forex market.

To trade the forex market on intra-day time frames you will need to use a flexible trading method that allows you to jump in and out of the market numerous times each day. Some trading methods are best for longer term trading strategies, you will want to avoid these and focus only on shorter-term trading methods that are conducive to learning how to day trade forex. A forex day trading educational service that offers live trading instruction would be a great way to get real time trading experience from a professional forex trader. There is really no right or wrong way to learn how to day trade currency, however, it is always best to learn from a professional trader, this fact applies to all trading styles and all markets.

Using an educational service that offers a live forex trading room is an extremely way to learn how to day trade forex. There is no substitute for live instruction from a professional forex trader while looking at the exact same computer screen that they themselves are trading off of. This teaching method lets you see the market from the perspective of a professional forex day trader as he or she explains why they are doing what they are doing in real time conditions. Some live forex trading rooms even let you ask questions of the trading instructor, this is essentially like college for people who want to learn how to day trade currency.

Learning how to day trade forex markets can be a great journey in self discovery and personal achievement. However, this journey can also be filled with frustration and confusion if you do not take the time to learn in a methodical manner. It can be very tempting to think you can teach your self how to day trade forex, however, keep in mind there is a reason why most traders fail and give up or blow out their trading account. Trading is not easy and day trading is probably even harder to learn by yourself because of the fast pace style of trading it requires.

Once you do learn how to day trade currency markets however, it can be a very exciting and lucrative way to make a living. Full time forex day traders enjoy freedom in the truest sense of the word as they can work from anywhere they choose and make their own schedule. Make sure you learn how to day trade forex from a trusted professional and you will drastically reduce your learning curve and thus be able to enjoy the spoils of a lucrative trading career much more quickly.

Author: Sterling S
Article Source: EzineArticles.com
Provided by: How Electric Pressure Cookers Work

Some experienced traders dogmatically assert that nobody makes money day trading. That is probably because they have tried, failed, and found some other trading style that suits them better. There is no doubt that day trading is a tough, competitive business, but the good news is that if it is your dream, it can be made to work for you.

Successful traders specialize in a trading niche which suits their temperament. In the process of doing this they may try different vehicles and strategies which are unsuccessful (for them). This is usually because the strategy is unsuited to the trader, not because it is “bad”.

After following a few blind alleys, I found my niche day trading grain futures contracts. I enjoy getting almost instant feedback on my trades, and having my money safely parked on the sidelines most of the time. It turns out that day trading suits my temperament, whereas longer term trading does not.

Day trading critics often trade relatively stodgy Forex markets. However, trading costs can sink a day trader, and, despite “commission free” trading offered by brokers, Forex trading costs are too high due to spread and slippage charges.

I prefer markets with greater volatility and enough volume to ensure a tight spread, but not such a huge volume that the market becomes hard to read. The grains (soybeans, wheat and corn) do the trick for me.

Do NOT decide on a market before you decide on your trading style. Find the style that suits you, then find the markets that respond best to that trading style.

Successful day traders should:

• Learn the concept of support and resistance in a market.
• Develop a trading system based on tactics at support and resistance levels.
• Test the system on independent data to make sure it has a positive Expectancy.
• Learn money management techniques to prevent taking on to too much risk.

Day trading often involves regular repetition of a simple trading plan to place high probability trades. If you learn the principles outlined above, stick strictly to your plan, and learn to avoid mistakes made in the heat of the moment, you are well on the way to day trading success.

Most day trading is done by professional traders who experience lower stress levels than you because they are using bank funds. You have to beat them at their own game despite the additional anxiety of having your own money at risk!

Two cardinal sins for a day trader are trading without a plan, and over-trading. You must have a plan which dictates your every move in the fast paced cut and thrust of a market session. Otherwise you will be a victim of bad decisions driven by emotions, the downfall of many a trader!

Over-trading often arises because you experience a loss and try to get it back by taking an unplanned trade. Very often, you end up making a bad day into a disastrous day. Sometimes people over-trade because they feel the more trades they take, the more money they make. In fact, all they are doing is building up huge trading costs which make it very difficult to make a profit.

Even though I am a day trader, I take less than one trade per day on average. If the trades you take are good quality, you can still make good returns. (For example, I placed 15 trades in February 2010 and recorded a return of 39% on trading capital invested. You can see the trades here).

Author: D Bennett
Article Source: EzineArticles.com
Provided by: Programmable pressure cooker

Day trading or same day trading is a unique and popular concept among stock players who trade with the aim of making quick profits. Day trading is an attractive option for all stock traders for having the potential of incurring huge profits if traded wisely and calculatingly.

There can be two types of day trading. The first is the delivery-based day trading where the trader takes delivery of the shares and hold on to them till he gets favorable rates to dispose them off at a profit. The second type is the same day buying and selling without even taking delivery of shares. On an average, it has been noticed that market are about 2-3% volatile on a daily basis. The day traders take advantage of this market movement to extract profit out of their chosen shares.

It has several advantages. Trading can be done even with a small amount. There is no need of huge investments. So it suits every pocket. Moreover, you get return on your investment daily and do not have to wait for profits. So you can constantly roll your capital without blocking it.

It is however a risky business. The profits extracted out of day trading are not huge as the market move on a limited scale on a daily basis. In order to reap high percentage returns, one usually has to hold on to the shares and wait for sometime with a long-term horizon, which is not possible for day traders.

It is also easy to lose money in day trading and the strategy is not as easy as it seems. The biggest hurdle that a day trader faces is that he does not know when to enter and exit the market. The stock prices need constant monitoring and day traders need to sit hooked up to the computer screens for hours. Investors also make the mistake of not using the stop-loss order strategies to minimize their chances of losses. Thereby they fail to protect their money from these daily short-term market movements. These traders also make the mistake of holding on to their stocks overnight with the aim of finding an opportune time the next day when the markets open once again, to sell them off and make up for the losses. But this way they do not comply with the basic principle of day trading. The concept of day trading came into vogue because traders were interested in selling off their shares the same day. This practice is generally encouraged as it protects the stocks from the market movements triggered by happenings beyond the official trading hours when the market remains closed.

There are several types of day trading styles. These styles are implemented by the different traders to suit their specific personalities as well as their specific needs. Day trading might be short term trading in which traders hold their position only for a brief time period that ranges from a few seconds to minutes. This practice is also known as scalping. Day trading might also be in the form of swing or position trading in which the positions are held for the entire trading day. Thus day trading can be very flexible and offer a wide range of options. Most day traders would simply stick to a particular style but sometimes they might just go in for a mix of styles mostly depending on the market and general economic scenario prevailing at a particular point in time.

Day trading also has different trends of trades: Trend trades, counter-trade trends and ranging trades. Trend trade happens in the direction of the price movement, for example, buying of shares when the prices are moving up and counter trend trades happen against the direction of the price movement, that is, selling of shares or stocks when the prices move up. Ranging trade move back and forth between two prices and is usually practiced when the market is moving sideways. Traders adopt different trends depending on the market situation.

Even though the primary goal of every day trader is to make profit out of a single day and look for opportune moments for trading, they might differ in their strategies. Some traders might try and take advantage of each and every market fluctuation and trade several times a day. On the other hand, there might be traders who would wait throughout the day trying to gauge the best market situation to conduct a trade and might end up with just a single trade in one complete day.

Author: Micheal James
Article Source: EzineArticles.com
Provided by: PCB Prototype & Manufacturing

So you want to become a Forex day trader? Well, there are some important variables that you will need to take into consideration before you set out on your own. First of all, you will need to decide if you have enough capital to start trading with. Day trading requires higher starting capital because you will generally be exposed to more broker fees due to the high volume of trades you will be entering and exiting. Other important variables will come into play as well, factors such as what method you use to day trade Forex with and whether or not you learn how to day trade Forex from a professional Forex mentor or strike out on your own, these are important considerations to take into account before trading with real money in the market. Still, other important considerations include things such as will you be available during the most profitable trading hours? Or, what is your plan for a solid technical education in trading Forex?

Learning how to day trade Forex can be a tough task if you do not have enough trading capital to fund your trading account with. Day trading requires more money to start with because you will be entering and exiting a higher volume of trades each day which will expose your account to more spread fees or other brokerage fees. This is not to deter you from learning how to day trade with Forex, indeed day trading the Forex market can be one of the most profitable ways to trade if you learn from the proper educator. Just keep in mind that you will need a little more money to get started day trading Forex as compared to position or swing trading.

What method will you use to day trade the Forex market? If you do not know than you have your work cut out for you. It is advised that you learn a logical and simple yet highly effective method that makes use of solid price action setups and a few good moving average indicators to day trade Forex with. Which ever method you decide to go with it is highly advised that you learn from a professional trader offering educational services. If you can find a live Forex trading room that teaches traders how to day trade Forex live than all the better. Live day trading instruction from an experience professional trader will drastically reduce your learning curve and thus speed your ultimate goal of becoming a financially independent Forex day trader.

Another important factor to consider when learning how to day trade Forex is what times will you be available to trade. The best times to day trade Forex are between 1:30am-4:00am EST for the European session and 7:30-10:00am EST for the U.S. session. Day trading Forex during any other time frame is possible but the amount of price movement and volatility you will get will be much less than trading during the times just listed. If you cannot trade during one of these time frames than you may want to consider position trading. Finally, when learning how to day trade Forex it is important you learn from an educator or educational service that offers more than just signals. The source you learn from should offer a relevant and effective education in the method they teach and ultimately be geared towards teaching you how to trade for yourself rather than stringing you along with entry and exit signals only.

Author: Sterling S
Article Source: EzineArticles.com
Provided by: Smart cooker

One of the biggest financial markets in our economy is the foreign exchange market, which involves a lot of currency day trading. The foreign exchange market and currency trading are not as complicated as they may sound but the rise in the number of people involved in this kind of short trading requires more of an explanation.

Day trading is when a trader buys and sells in a financial market and the trades take place the day that they are made. You can participate in a variety of types of such short-term trading including stock trading, stock option trading, commodity trading, and currency day trading. This is different from swing trading in which the stocks or other traded items are retained for a period of time instead of just for that one day.

People who participate in day trading buy and sell without retaining the stocks or other commodities overnight. You cannot participate in this kind of trades unless you are able to raise enough capital to purchase a minimum of 1,000 shares of stock in one day. If you are new to the idea of this short-term trading, you need to know that you should have about $25,000 in capital available and you should be willing to risk losing all this capital.

Successful day trading requires knowing when to cut your losses. You also have to be able to pick up on trends, go with market flow and to do all this without emotion. The best way to succeed in day trading is to purchase and sell the stocks that sell in higher volumes so you can sell them without problems.

How Is Currency Day Trading Different From Other Short Term Trading?

Currency day trading is different from most day trading because you can participate even if you are not able to raise $25,000 in capital. When you participate in this foreign exchange trading, you can do so with just a few hundred dollars in capital. You can open a mini account in the forex market with very little money.

The benefit to participating in this type of foreign exchange is that you can trade all day and night because the FX market never closes. That means no matter what your schedule, you will be able to find time for trading currency pairs.

You can easily buy and sell currencies all day long. You are able to trade with minimal capital, which means you are not going to lose a lot of money if you use stop losses and stick to your system. You can also use leverage to increase your trade amounts.

Should You Use Margins?

Normal day trading comes with a margin of 4 to 1. That means a $25,000 investment would allow you to trade up to $100,000. Currency day trading gives you a 50 to 1 margin so you can turn a little bit of capital into some great large trades.

You can use as much or as little leverage as you are comfortable with when you are participating in short term forex trades, sometimes called scalping forex, so you do not have to take risks you do not want to take. The FX market is always moving so there is a lot of liquidity. The number of currencies in the foreign exchange market is much less than the stocks in the regular market so you do not have as much to keep track of.

Day trading forex currency does have its risks, as well as its rewards. You have to be smart about your trading, though. The market is constantly changing so you have to watch for the ideal time to buy and sell. You can win and lose trades just like that so it is possible to earn big profits in a small amount of time. Currency day trading requires you to educate yourself about the market, the trends you may see and the best strategies for trading so you can maximize your profits.

Author: Kay Forese
Article Source: EzineArticles.com
Provided by: Pressure cooker

If you are interested in day trading because it has the potential to make you lots of money and deliver a higher lifestyle that you crave, you better be prepared to work for that income. It’s true that you can make tons of money through day trading, but that only comes for people who take the time to learn the rules and develop effective strategy. This is a job you have to prepare for and perform to the best of your abilities every single day.

Successful day traders that pull in large sums of money on a consistent basis and enjoy the best lifestyles are those that have two things: consistency and rules. They know what the rules are and how to best live by them, and they get to work day after day with a very consistent work schedule.

In order to start day trading, you have to have money in your account. If you don’t have money in the account, you will not have the power to buy and sell at the level needed to make real money. This is why the first order of business when starting with day trading is determining how much start-up money you need and getting it into your account.

The limit for day trading buying power is four times the customer’s maintenance margin excess. This is something that is figured at the end of each business day and is a reflection of the customer’s account position at that time. It can go as low as two times the maintenance margin for some in day trading.

When a customer has an outstanding day trading margin call, their margin buying power will be reduced. This is done after determining the customer’s total cost for all trades completed that business day. The customer is then expected to meet the day trading call by adding money into their account, and they have five days to do so. If they do not add the funds in that time frame, they will only be allowed to trade cash online for three months, or until they meet that call with adequate deposits.

Some pattern traders may try to use cross guarantees to mess with day trading margins, and this is not permitted. Liquidation occurs when an existing position from the prior day is sold, but the rules of day trading do not allow for the re-purchase of that position to create a new position.

It may seem complicated at first to learn all of these rules that govern day trading, but once you get them down and start gaining some experience you will see that day traders have a lot of fun and bring home a lot of money. But, it is well earned money.

If you want to be one of the very successful day traders, you will have to get some insider knowledge and really improve your consistency over time. Remember, consistency is extremely important in day trading, which is why so many people sign up for courses that teach them what they need to know to improve their trades. This is a good idea if you are really serious about trading long term. It will teach you strategy and rules that are needed for success.

The Trade Academy is an excellent resource for beginners who want to know what it takes to be successful in day trading. They offer seminars and a variety of courses that teach all about the stock market and they will give you lots of insider information on how to be very successful with day trading. This is one of the most well respected resources for those beginning with trades, and attending their courses could drastically improve your odds of making money rather than losing it.

Even those with lots of experience in day trading respect and trust the information they receive from instructors at the Trade Academy. This is because their instructors really know the ins and outs of this business and they willingly pass that information along to people just like you. Their goal is to increase your productivity and enhance your experience as you get into trading, and if you really listen to them they will do just that.

When you take these courses you are being instructed by some of the best traders this industry has ever known. It’s rare that experts like these instructors would pass on all of their strategy secrets and information about the business to others so willingly, but they are! They will give you all of the tools needed to make smart trades and bring in the big bucks. It is quite difficult to be very successful without this type of information and a lot of sound strategy. That is why you take these classes! To improve your strategy so you can bring home more profit.

Day trading can be a very prosperous career, or it can be a very damaging losing adventure. It only becomes damaging and a loss when you jump in without knowing what you are doing or where you are headed. That is why taking a course is so important. They tell you everything that you need to know right from the start, putting all the secrets to success right in your hand. It really doesn’t take much time to learn day trading strategy well enough to apply it to lucrative trading moves, and once you have it down you are free to enjoy the most exciting and rewarding career you have ever stepped into. This is a career move to be excited about…as long as you arm yourself with the knowledge needed to be successful!

Author: Leon Edward
Article Source: EzineArticles.com
Provided by: Make PCB Assembly

I will cover the short term trading first up. Most would call this Day Trading. The following is just my set up and thoughts on how I trade. So please don’t take this as gospel. Have a look at the set up if you wish, and see if you can use it or even modify it to suit your needs. You may take one look at it and think it is rubbish. Fair enough also.

Okay if I am day trading, that means I want to be in and out of the market sooner than later. I would prefer not be sitting at my computer for hours on end if I can help it. You have probably gathered by now that I have a specific target for the day, and this is normally around 20 pips profit. I have been through the maths and the power of compounding, so you know my thoughts on this already.

With the day trading, I stick to trading just the one pair, that being the EUR/USD. It is by far the most popular pair to trade and it consistently has the lowest spread. On Oanda, which is my day trading platform, the spread is normally 0.9 pip. If you were trading a pair that had a spread of 5 pips, then as soon as you enter, the market has to move at least 5 pips just to get you to break even. Trading the one pair also allows you to concentrate all your efforts into that pair.

I will look at starting my trading any time after 2pm local. This is the tail end of the Asian session, which is then followed by the London (European) session, and if I am not done by then, it is into the US session.

As previously stated, I will check with Forex Factory before I start to see what major news releases are due out that may affect the EUR or the USD. I need to be aware of these so I can be prepared around those times. Very important.

I have my set up on my GoTrader MT4 platform, but I am looking at a slightly varied version on the VT platform. More on this later if I go down that path. For now it is all done on the MT4 platform. A very popular platform that is readily available, with very good charts.

There are two charts on the screen. They are placed side by side (tiled vertically). The two charts being the 5 minute and 60 minute EUR/USD. The 60 min chart takes up about 1/3 of my screen space and the 5 min 2/3 of the screen space.

Both charts are candlesticks, which I have coloured red for bear candles and green for bull candles. This is just a visual thing for me as I like to see at a glance if the market is heading up or down. Also on the 60 min chart, I will look out for certain candle patterns that I am comfortable with. More for confirmation than actually trading off them. There are 4 or 5 pretty basic candle patterns that seem to work more times than not. These include Spikes (eg hanging man, hammer), Engulfing, One Up One Down pattern, Dark Cloud Cover/Piercing Pattern, or exceptionally small or large candles. If you Googled them and just checked them out, you will get a fair idea of what I am talking about. Mainly used just to give me a heads up or confirmation of a trend change on the 60 min chart.

The 60 min chart also has the Daily Pivot Lines attached. This is a custom indicator that is freely available from many MT4 support type sites or forums. There are normally pretty simple instructions on how to load indicators onto your particular platform that are easily found just by doing a few searches. If anyone needs some help, just drop me a line and I’ll help you out. Also on the 60 min chart, I have a Stochastic Oscillator with the settings of 10,6,3 and Linear Weighted. I have 2 horizontals levels at 80 and 20 on the stoch also.

The 60 min chart is just to give me an idea of where the market is going, and can normally give me a better idea of which side of the market I should be trading off the 5 min charts. One quick look at the 60 min chart, I can see what pivot lines are approaching or have been breached, which way the stoch is heading, any relevant candle patterns that may affect my decisions, and the chart itself will tell me if price is heading up or down and for how long. If you looked at last weeks 60 min chart, you would see that it was a dog’s breakfast with no real direction or trend. A very ugly chart indeed which would have been difficult to trade if you primarily used this time frame.

Now to the 5 min chart, and this is what I trade off. As already mentioned, I have red and green candles for price action. Candle patterns aren’t that reliable on this smaller time frame, so the colours only give me a visual on direction. If you are bullish, it is nice to see green candle after green candle etc.

My one and only indicator below the price chart is also the Stochastic Oscillator with the settings of 10, 6, 6 and Linear Weighted. Slightly different to the 60 min stoch settings. Also on the 5 min stoch, I have only highlighted the Main line, as the Signal line has been made the same colour as the background. In my case, my chart background is black, so that is the colour I select for the Signal line, therefore it should be invisible. My Main line is coloured Steel Blue, so it does stand out nicely. I then add horizontal lines to the stoch at an interval of 5 from 0 to 100. So there are 21 dotted horizontal lines across my stoch. The lines at the 20, 50 and 80 level are red, with all the others yellow. So what you end up with, is a steel blue line snaking up and down through a bucket load of horizontal lines.

I am testing out a possible filter of a slightly modified MACD, that will keep me out of some losing trades, but it also seems to get me into winning trades a little late. More on this later if I think it is worthwhile pursuing.

So first I will look at my 60 min chart to give me an idea of what will give me the highest probability of success, long or short (buy or sell). If I have decided that it is all very bullish, then I will only take long trades on the 5 min chart. If I am undecided, like last week, then I am quite happy to play both sides of the market.

Now if I was thinking long trades only, I would then look at the 5 min chart and see which way the stoch line is heading. If it is heading down and getting close to the 20 level (oversold), I am now waiting for it to turn up before I enter a trade. What I want to see, is the stoch turn up and break through one of these horizontal lines to the upside. If this happens, once that 5 min candle closes, I will open a long trade on the open of the new candle. I always wait for confirmation so therefore the candle has to close to confirm that the horizontal line was in fact crossed to the upside.

As I use Oanda to trade, I have preset my stop in at 20 pips and my target at 10 pips, so they are automatically set as soon as I enter the trade. Once the trade opens, I quickly check the platform to ensure the stop and target are correct. I then look at my 5 min chart and see if there is an obvious place to close my stop in to reduce my risk to less than 20 pips. This maybe just below a previous low or under a pivot level. Then if I am pretty confident the trade is going to go my way, I may remove my profit target altogether and just watch the trade like a hawk. Sometimes, you just know that there is plenty of potential in a trade and the set up is pretty good, that you just wouldn’t be that happy with 10 pips. This will come with experience. The plan then is to get the stop to break even as soon as possible, so at least you are in a no lose situation. From there you can manage the trade from a much better mental position.

Okay, so continuing with the above long trade example, the stoch has turned up nicely and now cutting through the horizontal lines as it continues higher. I would be making an effort to trail my stop at a reasonable distance. So price stalls for a bit and the stoch turns down. Now what? My exit signal would be a confirmed break of the next horizontal level down on the stoch. Which again means I would have to wait for the close of that 5 min candle to confirm the break. Or if the stoch line didn’t break a lower horizontal line, and then recovered back to the upside, I am still in the long trade. If the stoch is getting close to the 80 (overbought) level, then you would be a little more wary of a potential reversal. It may be a time to take profit, or really tighten up your stop.

Say in the above example, the stoch did cross down on the 5 min chart, and when I looked at my 60 min chart, I see that price has just bounced off the 1st Resistance Level and that there was a big spike candle. This may be enough for me to take a short trade, now looking for the 5 min stoch line to head down through the horizontal levels. Again I will stay in the trade with a reasonable stop, watching for a turn up on the 5 min stoch line.

So in a nutshell, I am using the 60 min chart for a guide on general trading direction. I then base all my trades on the 5 min chart and the movement of the stoch through the many horizontal lines. If I am trading with what I consider to be the main trend, I will give my trades a little more room to develop, but if I am trading against the main trend, then stops will be tighter and I may go for set targets and get out and wait for the reversal to be confirmed.

One other thing I like to look out for is ‘divergence’, whether it be on the 60 min or the 5 min charts. I find it a very accurate indicator that can really give you a lot more confidence when taking certain trades. Divergence is easily explained as a difference between what price on the chart is doing compared to what your indicator is doing. An example: On the 5 min chart there has been a high, then a pullback, where the market then makes another high and then falls away. So you have had a high followed by a higher high. At the same time on the 5 min stoch, the first high has caused the stoch to head up to say the 80 level and then turn down on the pullback, and then when the chart price is making its higher high, the stoch is only reaching the 60 level before falling away. So the stoch made a lower high, and nine times out of ten, the market price will head lower as the stoch is showing the market as running out of steam. That is only a very rough description of divergence. Google it as it is a pretty interesting subject in itself.

With day trading, you have to really go all out effort wise, with total concentration. You have to be prepared to take small losses and keep chipping away at the market. Just about every day, there are one or two decent moves on the 5 min chart that will make it all worthwhile. Don’t be greedy, going for the big kill every trade. Maybe even start your day with a small trade looking for 5 pips just to give you that winning feeling. There is a lot of discretion involved in day trading also, as it is very difficult just to rely on indicators to get you in our out of trades. They certainly help me but there are plenty of times where I just look at the chart and something doesn’t look quite right, and in that case, I may just give it a miss. I may regret that decision, but that’s just trading. There will be plenty of trades coming along soon enough.

It is very difficult to write down a description of a trading method without charts as examples. Not sure if I can add charts or pictures to this article. It has also been a pretty lengthy post and may have confused some. I apologise for that. If anyone would like more info or even a screenshot of my charts, just drop me an email at buff33@bigpond.net.au and I’ll see what I can do.

That will probably do it for now, and at least it gives you something else to look at. Whether it works for you or not, only you can work that out. Thanks.

Author: James Sheach Brown
Article Source: EzineArticles.com
Provided by: Wordpress plugin Guest Blogger

Successful Day Trading Strategy is dependent on many variables, rather than just one “magic day trading pill.”

The day trader’s skill level, for example. Or his or her day trading experience level. Or the quality of the day trader’s training. But there is one variable that is often overlooked when people assess their overall day trading strategy, and/or try to figure out why they can’t seem to win a trade to save their lives.

There are many Traders out there, new and experienced, that have lost trades before they ever hit the “execute” button on their trading platform. These traders can’t seem to win trades consistently. Their losses far outpace their day trading success.

They’ve taken the time to learn day trading, and they have what they THINK should be a winning day trading strategy, but they still keep losing. But these day traders can’t figure out why (or, rather, why not).

They are doing everything right, following their day trading strategy to the “T”, charting their course.

So why is that some Day Traders are so successful, and other’s just aren’t?

There may be many reasons why, but there is one BIG reason that is responsible for the failure of many would-be day traders.

Here is a key day trading tip – Day trading is an art, not a science. An artist’s attitude and outlook is reflected in his art. If an artist has a negative attitude, a defeatists attitude, then that is reflected in his art.

Successful Day Traders have a Winner’s Mentality.

They go into a trade with a positive outlook, fully expecting to win that trade. Sure, they don’t win every trade. But they are mentally prepared for it when they do lose, and can overcome it, and get back on track for successful trading. But most importantly, they are mentally prepared BEFORE they ever enter a trade.

If you have a Defeatist attitude, you will lose far more trades than you win.

Why? Because your thoughts affect your actions.

Your Fear of loss will cause you to hesitate, and get into a trade too late, or miss it outright all together.

Your Fear of Loss will cause you to panic if a trade starts to go against you, and hit the EJECT button, locking in your losses, rather than trusting your day trading strategy.

Your defeatist attitude can even skew how you see the market’s behavior. If you have a defeatists attitude, you might see a positive indicator as negative, and enter a trade in the wrong direction. You might misinterpret what is happening leading up to your trade, causing you to execute poorly. And your Defeatists attitude will cause you to place sole blame on your day trading strategy, rather than on yourself where that blame belongs.

On the flip side, if you have a Winners Attitude, you won’t hesitate. You’ll KNOW what to do in every instance. Day Traders with a Winners’ Mentality also realize that day trading is an ART, NOT a Science. You don’t automatically get output “X” if you input “Y”.

By trading with a Winners’ Mentality, you’ll BELIEVE in your system. And most importantly, you won’t compound losses with losses. You know that trading is inherently risky, and that there exists the potential for real and substantial losses. But with a Winner’s Mentality, you can get past losses, and you can secure strong wins, much more easily than the Defeatists.

The Market presents opportunities to day traders to take advantage of. If you have a “Winner’s Mentality”, then you’ll be much more likely to take advantage of those opportunities and develop into a Market Dominating Day Trader. But if you continue to trade with a defeatists attitude, than your success as a trader has already been determined…and the outlook is grim.

Author: Christopher Call
Article Source: EzineArticles.com
Provided by: Guest blogger