As a trader you need to understand why it's that you enter a specific position, what is your personal specific reason for position entry, the solution can't be "It looks like it is going up". You can't put down money based on a gut feeling; you need to be motivated by a technical reason found in the chart that you are observing. Another factor that will influence your trading is volume. The typical daily volume of a standard that you choose to trade ought to be at minimum 1M shares. Be very cautious when risking your equity, ensure you have spent the required time paper trading, otherwise you will pay a lot of money in market tuition... understanding that can be quite costly.
Something different that will have to be considered will be your personal workstation. Keep your work area clean, and uncluttered. A disorganized desktop will not permit you to think clearly, and will show to be distracting. You will need a good monitor setup (2-3 monitors minimum) allowing an individual ample real estate to view charts, level 2, etc. Additionally, you will require high-speed Internet connection along with a good direct access broker. This is a serious profession determined by mathematics and market psychology, so act professional. In the event you trade with a budget day trading casino mentality, you may quickly gamble away your complete account.
A Few Words About Charts
I had to spend a few months of experimenting to get my personal g-spot for my own individual chart setup. I'm going to offer up some tips how you can best manage your personal charting.
Keep it simple, and uncluttered. Simply have the essential information displayed because you will spend a lot of time just awaiting a healthy setup to give itself. If you have an intricate window to look at with numerous flashing colours and numbers, you will get eyestrain.
To reiterate for the first point, don't have too many technical indicators on the charts, especially indicators that conflict signals.
Have no less than one broad market chart and something sector chart, is he making new highs today in comparison with yesterday? It is important to gauge the marketplace relative to the previous trading day's range.
Have a moment and sales window to your stock, is there a purchase and sell pressure?
When reading your Level 2 window put it to use primarily for order routing only. You can't always base a trading decision on what information you see there, because there is a great deal of bluffing and intentional manipulation that occurs in Level 2. You should focus on the big picture of the market first and foremost, can it be a red or green day? Is it a volatile day or possibly it very choppy with deadly whipsaw like activity? Once you've performed this initial diagnosis, then you can certainly use the individual chart patterns to distinguish a profitable entry and exit point. A typical beginner mistake is simply jumping in and out whenever and where ever-an entry and exit point must be determined BEFORE you place the trade.
See this book to learn more strategies that will significantly improve your trading profitability.
Ashbee A. Bakht is an international best-selling author who holds a college degree in psychology from Brock University, Canada and the man attained his postgraduate education in minerals and mining on the prestigious Norman B. Keevil Institute of Mining Engineering, in the University of Bc, Canada. As a professional commodities trader and arbitrage specialist, Ashbee's strength can be found in taking positions according to economic forecasts of trends and seeking out arbitrage opportunities. Ashbee concentrates on trading crude oil, gold, silver, along with other base metals.