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Why Daytrade?

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Many trader friends ask me why I daytrade; the real-time data feed is expensive, slippage and commissions are a considerable expense relative to position trading expenses, and it requires an intense focus. My response is that if you�re good at daytrading, the returns can be much greater because you can trade several times a day rather than once a week or once a month.

I find I sleep much better when I daytrade than position trade. What brought me to daytrading was being stuck in a lock-limit move against me for four days carrying 15 contracts. It was an unpleasant experience. Aside from no overnight surprises, the disciplined daytrader leaves less money on the table than position traders.

In daytrading the price patterns form very quickly and require a disciplined, automatic response once a trading signal is perceived. A disadvantage of a real-time data feed is the almost universal compulsion to over trade. The constant price bar changes, the volume histogram, the screen refresh and the dancing indicator colors must strike some deep-seated need for action now. The flashing, changing neon of Las Vegas exists for a purpose.

The opposing factors of quickly responding to Signals and a deep need for action now must be dealt with by every daytrader. I suggest simply watching a screen with 1-minute, 3-minute and 5-minute price bars for a full day. Do not trade. Observe the movement of the bars and at the end of the day, note the ideal buys and sells on the 5-minute price chart.

Now, go to the 1-minute chart and allow yourself to see all of the noise, price movement and false entries prior to the optimal entries. Know that you must exercise discipline and take only your Signals.


By Charles Holt,
Daytrader's Bulletin
http://www.daytradersbulletin.com
Real-time Trade Signals for S&P 500 & Nasdaq 100









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