Day Trading Tips To Give You An Edge

By Dr. Barry Burns

Day trading can be a fun and exciting way to make money. But it's more difficult than most beginners imagine. Here are some day trading tips that can benefit the new trader as well as the more experienced trader to help you achieve your goals faster.

First: Be careful not to over trade. The majority of the time the market is a random walk - meaning that it's moving without any rhyme or reason. Amateur traders taking small positions in the market are behind these unpredictable movements.

These retail traders don't affect the long-term moves of the market. It's the pros, with their large volume and their willingness to hold positions longer, who create sustainable moves in the market that can result in significant profits.

Many traders are lured to day trading because of the energy of the business and the potential for big profits. This mindset is not helpful. The pros keep their powder dry for long periods of time waiting for a high-probability situation to happen. They are much less active than beginners think.

Second: The trend is not always your friend. Perhaps the most common axiom in trading is "The trend is your friend." That is a half-truth.

The truth is that the trend is a fair weather friend!

It's true that the trend is your friend early on. But trends get exhausted and end. It's more accurate to say: "The trend is your friend, until the end."

There's two times when you can put the numbers in your favor:

Trading at these two times lets you put the "edge" of the bell curve on your side. Trading mid-trend, puts you in the middle of the bell curve where the outcome is completely unpredictable.

Third: Participate in chat rooms for day trading tips and do the opposite!

The biggest benefit usually doesn't come from listening to the room leader. It often comes observing the chatter of the participants while they comment on what trades they are getting into.

The vast majority of the time they were dead wrong in their approach.

They expose the collective thinking of the unprofitable amateurs. It's scary to notice how the amateurs all reason alike when it comes to day trading. If you watch them in the rooms for several months you'll begin to identify clear patterns of things they do wrong over and over again. Do the opposite and profit.

One of the most typical errors I find people do in the rooms is trade against the trend. You hear the same comments over and over: "This market can't go any higher now for sure." "It definitely has to turn around here now." "OK, the market is now way over-extended."

It is absolutely amazing to see how amateurs habitually trade against the trend in an effort to find tops and bottoms. They are constantly looking for the market to turn around. As is always the case, you can profit tremendously by taking the other side of their trades.

Day trading can be extremely rewarding, but to be successful you must stand aside from the masses and avoid the herd instinct that drives so many. These 3 day trading tips can help you be among the minority who succeeds.

Dr. Barry Burns is the president of Top Dog Trading, writes a day trading blog and offers a free 5-day video course which offers day trading tips. He has addressed DayTradersUSA, "Elite Masters of Trading," and Traders Expos.

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