5 Day Trading Tips for SuccessWritten by Mike Reed
If someone tells you that you can get rich quick day trading...run for hills! There are no overnight successes, unless you are very lucky!
Day Trading isn't easy, but with experience, dedication, self- control and hard work, you *can* become a successful day trader.
1. How to Treat Gap Openings. A gap up or gap down open is an emotional move, and it often will reverse course and turn in to "trap open". Gaps that are less than 4 points on SP Future tend to get filled in same day, especially Tuesday through Thursday. Turns will occur within 20 to 40 minutes after open. A trader must be on lookout for a reversal as soon as early momentum is lost.
A gap into a good support /resistance zone is almost always a good "fade" - with stops no more than 1 point on other side of support /resistance zone. (A "fade" is simply entering a position opposite of direction of gap. If market gapped down, a "fade" would be entering a long position (buying) in to selloff.)
2. When Market Moves Against You, When Do You Exit a Trade?
The way I trade, I exit as quickly as possible. There's no sense in waiting around for your "stop-loss" to get triggered when perceived edge is gone. I like to stay in control of my trades, and if market doesn’t do as anticipated, I don't wait for my stop to get hit. When there is no longer a high probability situation, exit and take a second look.
3. When Are The Best Times of Day to be Trading?
For me, best times of day for trading are first hour and last 2 hours. Here's an old rule of thumb (and this used to work like clockwork in "old days", and although it has diminished a bit, it still happens):
"The Minor Time of Day"- f Market opens higher, then there tends to be a pullback within first 20 to 40 minutes. If pullback is weak, there will probably be a continuation of rally into early afternoon. But, if pullback is sharp, then you've likely seen high for day and you'll want to be selling bounces.
How To Start Investing For Financial Independence, Part 2Written by Chris Anderson, PhD
Last week, we started a multi-part series about how to go from being a beginning investor to being “financially independent” in a steady and predictable way. Many, many people want to overly complicate this process so let's briefly, let's recap that discussion. The bottom line steps that I suggested in last article was: 1) Look for an opportunity that will return at least 150% in 2 yrs or less; 2) Be mentally and financially prepared if investment does not work out; 3) Have VERY good reasons why you don’t think you will lose money…… You may not make as much as expected, but you would rather not lose money at this stage. 4) Be patient. This single result should not either make or break you but it is crucial to a longer term plan. I gave an example where a hypothetical person had gone through this process and ended up with a profit of $43,000 (before taxes) and $36,000 of after tax profit. When this profit was combined with their original investment, they now had around $55,000 of operating capital for Step 2. Before we get to Step 2, let's take a step back. For a lot of people, if I told them that somebody made $43,000 on a quick investment, they would think these people had "struck it rich". Kind of like winning lottery, right? NO! In grand scheme of things, this investment will do very little to impact their financial independence. That is, it will take discipline to now use these profits to go into next investment, and then use those new profits to go into 3rd investment, etc. So, in our opinion, this first investment was merely a stepping stone towards a much bigger objective. In Step 2, most savvy investors will now realize they have just been given some extra monopoly money, or money that was not originally theirs, to work with. In investment and trading world, this is referred to as "market's money"; i.e., money that you got from market that you can then use to generate revenues above and beyond what was possible with your original investment. Quality traders can use this concept to produce huge % returns in a year while risking no more than 10% of their original portfolio. So let's say investor now decides to repeat process and buy two more preconstruction lots in a different development. In two years since first investment was made, suppose now that property has escalated. In addition, investor finds a good deal on two lots and each is $250,000 to purchase. Now, investors visits their check list to see if this makes sense: 1) Look for an opportunity that will return at least 150% in 2 yrs or less -- yes, they have reason to believe this will occur for their down payment amount; 2) Be mentally and financially prepared if investment does not work out--yes, they don't think it will happen but if they lose their entire 10% down payment, they are ok with this.