Follow on Post about Day Trading & How it is Different From Other Trading Styles
Posted on April 27, 2012
As we mentioned in our last day trading post our Technical Indicator and Chart Pattern videos are just as suitable for longer term trading as Day Trading but there are other things we have to take into consideration when moving from longer term trading to Day Trading.
Less Time to Analyze the Charts With Day Trading
When you Day Trade, especially if it is a very low time frame, you have the pressure of time running out. The bar is about to close and you have not made up your mind yet. You wonder if you have analyzed the chart enough, spotted the support/resistance and so on. The trade might run away from you if you do not take the trade right on the close of the bar. Because of this you are pressured on time and when that is the case you have to be quick when analyzing the chart. When you have less time you might overlook some things and make mistakes.
Closing Your Day Trading Position Before End Of Day
When trading daily charts you do not have to stress about whether you will reach your target before the market closes. This is another thing you have to be aware of when Day Trading. Do you, for example, enter a trade 30 min before closes for it then it be very difficult to get your target unless there are significant moments in the stock or future. You might think that is not a big problem as you can just close the trade out before reaching the target but then you are not thinking about your risk/reward. Constantly taking profit too early makes your risk/reward look very bad.
In the next post we will get into when not to trade during the day. Just because the market is officially open does not mean it is wise to trade every opening hour.