OKE FOREX: day trading

Showing posts with label day trading. Show all posts

Thursday, 4 July 2013

Importance of day trading plan

Whether you want it or not you do need at least a few rules in your life. There are things that you tell yourself you �should� do, but there must be a few things which you �must do�. If you label everything under should you will hardly achieve anything in life. �I should lose weight, stop smoking, sleep less, work more and etc.) It does not work. Have a few �musts�. The same can be said about day trading. You need a few rules and you must have a trading plan to be a successful day trader. I want to talk a little about it in the post.

If you do not have a plan you will be ruled by emotional impulses and illogical behavior. You cannot trade on the hunch all the time. Occasional trade is ok, but not regular. Do you get what I mean? I hope you do. Trading rules help you to shape and filter your trading system and keep you from making spontaneous trades. I would say that a bad plan is much better than no plan at all. No army general would go to battle without a strategy and a plan. The same can be said about successful traders. Trading is battle for money. Somebody is after your money and you are after somebody�s. Cruel truth, but truth!

Before you ever consider of opening a trade you need to look through your plan and see if a possible trade meets your criteria for a �good trade�.

Some of the points you might ask yourself:

Is there some technical pattern that indicates a reversal or continuation? I wrote a number of posts on the topic and the series is not finished yet, but as I wanted to make a short break I decided to write on day trading. Be sure to check my series on chart patterns.

Is price near support or resistance level? It is very important as it indicates a reversal level if you a security is in a range.

Is the price close to a trend line (upward or downward)? When price comes to a rising trend line (especially on daily charts) it is very usual for price to find support and jump off the trend line as strong demand comes to market. See how gbp/jpy pair bounced off its� daily trend line when price hit it on the 13^th of June 2013.

Do you see long bullish or bearish candles indicating that support/resistance is strong and you may trade in the direction of the tendency? These candle patterns indicate strong supply and demand areas (or accumulation/distribution zones). I haven�t written on candle patterns yet, but intend to do it after I finish chart pattern series.

Is the move I see is in the direction of the trend or is it a counter trend rally? Day traders can capitalize on both, but most successful traders trade only in the direction of prevailing tendency. Buying on dips in an uptrend and selling rallies in a downtrend should be a common practice for any day trader.

These are just some of the things that should be on your trading plan. I hope to add more stuff on the subject in my future posts.

I hope you benefited from the post. If you liked the post I would also be happy if you gave a plus on Google+, tweeted, liked it on Facebook and other social platforms. Have a nice day.

Vytas.

Day trading strategies and rules for dummies

10 top day trading rules

Day trading tips

Learn day trading

Is day trading for a living possible

Long term or intraday trading

Day trading example with eur/usd

If you want to see and experience what real investing in financial markets such as Forex, stocks and commodities is all about I recommend trying innovative social investment platform of Etoro. Initial deposits are as low as a few hundred bucks. The best dealer I have heard of so far!

http://www.etoro.com/A41516_TClick.aspx

Disclaimer

Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog http://trend0.blogspot.com/ is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.

Thursday, 17 January 2013

Day trading tips

I enjoy day trading as much as I enjoy swing trading and trend trading. All these three strategies have their advantages and disadvantages. I do not want to concentrate on the latter two trading strategies today. My topic for the post is day trading tips. There are things that you should have in mind before jumping on any day trade. There are other things that you should have in mind when you are on a day trade. I like going over those before I open a trade and also when the trade is actually open. Let me share those tips with you. I hope they will help you to make day trading for a living possible.

Know your set up for a day trade. When you open your charts you should know what you are looking for. Those might be: direction of a trend, support and resistance, supply and demand areas, reversal patterns, candle patterns and etc. You should know a situation that would trigger a trade for you.
Trade only in the direction of a bigger trend. Stop going after those counter trend moves. They do happen quite often, but you will lose more money than you make by chasing those.
Be patient and wait for the best set ups. Most traders lose money, because they take just about any set up that they think is good. They end up overtrading. Any number of trades beyond 3 per day is too much.
Do not trade choppy markets. Wait for tendencies to develop. Then trade in the direction of a trend on a daily basis till market conditions change. There is too much noise in the markets that go sideways. Try not to trade and set more time for analysis when markets enter these �noisy levels� � choppy trading times.
If you miss a trade just let it go. Going into a trader later might be just as bad as overtrading or simply trading a strategy that you do not understand. Let that missed trade go. There will be enough opportunities around if you are patient.
Trade from one support to resistance and from resistance to support by taking profits (at least partial). In day trading reversals are quite common and you should be willing to take small profits as price goes from one level to another. There will be profit taking by big market dogs and you do not want to be left behind.
Take your profits at or before an even number. That�s where big hedge funds take their profits. You might get out 10 or 5 pips before the area just to be sure you are not left behind when prices reverse.
Always have stops and let them always be smaller than your profit targets. That is the only way you can be successful in the long run.
Use limit orders for both your stops and profit targets. It helps you to stay disciplined and follow your plan and to be proactive, not reactive. You can exit market manually if you see that something goes not in the way you have planned, predicted or imagined.
If you had a bad trade, do not try to reenter market immediately. Do analysis before making a decision. Maybe market conditions changed and you should refrain from trading. If they haven�t you can enter another trade. Just do not rush!
If you day trade with a few orders take profits with the first one as soon as there is any and move stops with other trades by placing them below (above if you are selling) 1 or 4 hour lows (highs if you are selling).
If you want to leave your trades through the night put stops further from the price. You do not want to be stopped out during Asian sessions when profits are often taken and price moves against you. Leave room for these Asian session swings and wait for opportunities during London session.
Do not worry about a bad day. Better concentrate on your weekly and monthly results. Smile your losses off.
Do not trade when you are tired or under emotional stress. It is also wise not to trade for a few days if you have a losing streak. Do more analysis and less trading during these bad days. Trading psychology, not only a good strategy is one of the keys to success.
Write a journal analyzing your mistakes, winners, losers and predictions. A journal will help you to find out weaknesses of your system and trading style. It will help you to understand flaws of your character and perfect those.
Analyze your trades at the end of the day and prepare for next day making intelligent predictions as to where this or that security can move. Try to see if those perfect set ups for your strategy are coming or not.
Trade constantly even amounts of lots, amounts of securities till you double your account. Then you can change the number. The same about stop losses. You should start risking no more than 2 percent of your deposit and slowly move to 3-5 percent.
Identify direction of a security by looking at daily charts and implement your trades on hourly charts.
Find out what an average range of a security is and try to figure out the best place to enter your trade. If gbp/jpy range is a little bit over 100 pips and the pair has moved 80 pips it may not be wise to jump on a trade in the direction of the daily micro trend.
Use filters and confirmations on your trades. These may be higher time frames or technical patterns or any other things that gives your trade a higher probability to succeed.
Do not use breakout trading strategy too much. Prices are often overbought or oversold when breakout point is reach. This is particularly true about day trading.
If you are trading profitably cash out some money regularly. You want to enjoy your earnings by spending them not just looking at them in electronical form.

If you are ready to trade Forex, futures, indexes and stocks I recommend Etoro.
http://www.etoro.com/A41516_TClick.aspx

Ok, enough of these rules. If I get any more ideas I will expand the post. Hope it was useful and you will be able to apply the knowledge in your day trades. It takes time to learn day trading. So be patient.

Ok. I hope you benefited from the post. If you liked the post I would also be happy if you gave a plus on Google+, tweeted, liked it on Facebook and other social platforms. Have a nice day. See you soon.

Vytas.

Disclaimer

Thursday, 20 December 2012

Day trading example with eur/usd

Hi, I wrote about my expectations regarding eur/usd pair and gave you the entrance point on the pair. It was a breakout trade that started at 1.3188 level with a stop loss order at 1.3144. I took partial profits at around 1.3240 and then 1.3290 level. As you saw the pair collapsed yesterday. Some analysts started screaming about the end of a trend. I already mentioned in my previous post that I do not expect the pair to reverse before New Year and I intend to search for opportunities to jump into the market by going long the Euro against the US dollar. And I haven�t changed my opinion on the matter. I am still watching the market closely to see for extra day trading opportunities. One of the kind presented itself today and I want to talk a little about it in the post.

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When I search for opportunities to day trade I always want to do one important thing � to enter my day trades in the direction of a prevailing tendency. If the market is not in a range, but trending or in a short term swing (as eur/usd is at the moment) I will never make counter trend trades, but only implement those in the direction of a tendency. If you look at eur/usd chart you (with no doubt) see that the pair is in an upward swing. It means I am only willing to go long Euro and sell short US dollar.

Now, how do I choose a spot where I get into the market? Firstly, I wait for a retracement or a counter trend move. Secondly, I find some nearest support level and wait for the security to get there. Thirdly, I wait for reversal patterns at the level to see whether counter trend move is over or not. Those usually are 123 patternsand candle reversal patterns. If everything happens according to the described scenario I go long when the security leaves 123 pattern or I place a buy stop order above the bullish candle (1 hour or 4 hour chart).

So, I saw eur/usd collapsing yesterday. Pretty sharp! It means a counter trend move started. I started searching for a possible place of support. And guess what, it wasn�t really difficult to find. You most probably know this sampler saying of classical technical analysis that resistance becomes support and support becomes resistance. I have mentioned that I took a breakout trade at 1.3188 level a few days ago. The area was resistance at the time. Guess what has it become now? Support!

So, what happened later? The pair came to this level, formed 123 pattern and bang! Went up again. If you look at the chart below you will see the 123 pattern on 1 hour chart around the level. When I saw the pattern I placed my buy stop order above it and the market took care of it by breaking the level and going up.

Oh! I forgot to tell you how I get out of my day trades. I watch for obvious resistance and support levels, but most often I close my positions at an even number. Today the pair managed to reach 1.3294 level before going back to today�s breakout point of 1.3215 (well, a bit lower) and is consolidating now.

I would not be surprised if the pair took off upwards again tomorrow. Looks like another 123 pattern is formed at the level! I seldom trade Asian session (only about 5 percent of my day trades are implemented during that time), so I will wait for early European session to see how everything looks at the time. I might take another long in eur/usd tomorrow.

I do not think I will keep it open longer than 8 hours as quite a few brokers will not be working during holiday season and mine seems not to be working at the time too. So, I do not want to take risks trading during this time.

Ok, I think it is time for me to finish now. I promised to give you some thoughts of mine on Japanese Yen and I did not forget my promise. However, I will not do it today. Maybe tomorrow, but most probably some day during the weekend.

If you want to see and experience what real investing in financial markets such as Forex, stocks and commodities is all about I recommend trying innovative social investment platform of Etoro. Initial deposits are as low as a few hundred bucks. The best dealer I have heard of so far!
http://www.etoro.com/A41516_TClick.aspx

I hope you understood the way I day trade and it will help you in your trades. See you soon.

Ok. I hope you benefited from the post. If you liked the post I would also be happy if you gave a plus on Google+, tweeted, liked it on Facebook and other social platforms. Have a nice day.

Vytas.

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