Successful traders must manage time better than investors.
Executing short-term positions requires far more skill than just buying a stock and
holding it. But trading has a more attractive time/cash profile than investing. In other
words, you can make a lot more money quickly. But you can lose it even faster without
Short-termers exploit individual quirks of market behavior
and take fast, high probability profits. And you dont need a lot of different
methods. Some futures traders earn a good living just selling the same 5-min ledge
formation over and over again. While not as crowd pleasing as chasing EBAY or SEEK, these
well timed entries produce extremely high percentages of profitable trades.
Focus on optimizing entry and exit over all other
considerations. Fully understand the time character of each part of the market day. For
example, never buy weakness in the last hour if price is near the bottom of its daily
range. Time of day sentiment favors continued declines for issues near their lows at this
Remember this golden rule of trading: over time, excellent
entries on mediocre trades make more money than bad entries on good ones. Consider trading
single direct moves rather than holding through inevitable pullbacks. Increase position
size or improve the time/cash profile to risk more money. Or only scale in with part of a
position while waiting for the next big price move.
Cross verification must be part of your trading analysis.
When identical price hot spots appear in different forms of evaluation, odds
increase that position will succeed. An assumption exists that each new verification
(convergence at a specific price zone) raises the positive to negative feedback ratio. At
rare times, Fibonacci retracements, moving averages and trendlines all work together in
perfect unison. When they do, jump on board quickly.