One very important aspect of trading which is often overlooked by the novice online day traders engaged in online day trading is the number of trades to be taken during the trading day. Should they take just a trade or two during the day or trade as many as a hundred times during the day? It is very important for every trader to evaluate their trading style and see if they are over or under trading their particular style or system. Someone scalping the markets will have many more trades compared to someone trying to position trade during the day. Each style dictates its own number of trades. Too few or too many trades during the day can make a drastic change in ones profitability and consistency.
Every trader should trade the market based on his or her own personality. If someone does not like to watch every tic in the market and it drives them nuts to do so, they should stay away from scalping. They would be better off trading a few times a day based off key technical levels and price action. If on the other hand someone likes watching every tic in the market and gets excited by it then they might consider scalping where they might be in and out of trades in a matter of seconds or minutes many times a day. Some traders have little tolerance for risk while some have a bigger appetite for risk. This way the position trader can hold on to trades much longer than the scalper who will jump out of a position as soon as he starts losing a little on the position or he sees waning momentum.
It all depends on the individual trader and his or her lifestyle. Some can watch the market all day while others cannot. It also depends on the cost of doing business. Getting in and out of positions all day many times over can quickly add up in the form of fees and commissions for the scalper. So the scalper has to be right almost all the time to be able to make a good living at trading. On the other hand the position trader keeps his costs down by not getting in and out positions so often. He tries to capture bigger moves in the market with just a few trades. This enables him to be wrong more often than the scalper and still make money.
Every trader must be able to figure out if they are over or under trading their style or system. This can be done by studying each trade taken during the day. If they took many during the day and racked up excessive fees and commissions chances are that they over traded and did not follow their plan. On the other hand if they missed out on many opportunities presented to them by the market and their plan they probably are under trading and not properly following a plan either. In both cases self evaluation is critical for the trader's survival. They must make sure that they write a plan that will not allow them to miss out on high probability trading opportunities but at the same time keep them from taking on too many trades too.
Every trader should trade the market based on his or her own personality. If someone does not like to watch every tic in the market and it drives them nuts to do so, they should stay away from scalping. They would be better off trading a few times a day based off key technical levels and price action. If on the other hand someone likes watching every tic in the market and gets excited by it then they might consider scalping where they might be in and out of trades in a matter of seconds or minutes many times a day. Some traders have little tolerance for risk while some have a bigger appetite for risk. This way the position trader can hold on to trades much longer than the scalper who will jump out of a position as soon as he starts losing a little on the position or he sees waning momentum.
It all depends on the individual trader and his or her lifestyle. Some can watch the market all day while others cannot. It also depends on the cost of doing business. Getting in and out of positions all day many times over can quickly add up in the form of fees and commissions for the scalper. So the scalper has to be right almost all the time to be able to make a good living at trading. On the other hand the position trader keeps his costs down by not getting in and out positions so often. He tries to capture bigger moves in the market with just a few trades. This enables him to be wrong more often than the scalper and still make money.
Every trader must be able to figure out if they are over or under trading their style or system. This can be done by studying each trade taken during the day. If they took many during the day and racked up excessive fees and commissions chances are that they over traded and did not follow their plan. On the other hand if they missed out on many opportunities presented to them by the market and their plan they probably are under trading and not properly following a plan either. In both cases self evaluation is critical for the trader's survival. They must make sure that they write a plan that will not allow them to miss out on high probability trading opportunities but at the same time keep them from taking on too many trades too.
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