How to Improve Your Day Trading?

Having a daily technique is crucial to any successful trader, whether we trade futures, stocks, options or the forex market. The daily technique used at the School of Trade has helps hundreds of traders use a simple and concise 3-step plan, in turn leading to more consistent profits. No matter how busy your day is outside of trading, sticking to a plan is the first step to becoming a professional trader. This is finished by performing the daily method, day in and day out, CONSISTENTLY. Below are 3 EASY steps to follow for a better daily trading method:

Step 1: IDENTIFY

Another idea to consider is watching the Pre-Market and/or reviewing what has occurred to price since the open of the market (We will go over the benefits of 24-hour charts VS daily charts in an upcoming article). When you do this it makes it very easy to: Identify what type of market it is today; trending (higher highs, lower lows) or sideways (double-tops and bottoms etc.). This can help tremendously when you're choosing which type of set-ups you're going to use throughout the trading day.
When you begin your trading day, it's crucial that you try your best to identify specific roadblocks that might come up throughout the trading day. It can be easy to get quickly overwhelmed by all the information available for traders, but for starters you might want to consider focusing on important market changing events. Specifically News Events that are related to the market(s) you trade. Find out the exact time during the day so you can be prepared for increased volume in the markets.

Step 2: ADJUST

Trading is all about being prepared for what might occur in the future, plus adjusting accordingly. Of coursework no six can predict the future, but you can help your probability of success by knowing specific times throughout the day not to trade..... (News events, meetings etc.). What I've found helps me the most is to set an alarm clock, that way you know ahead of time when to sit on the sideline of the markets.
Also, marking key Support & Resistance levels, whether it be from the pre-market or past trading days, is crucial to your consistency as a trader. The reason it is so important is because price will tend to gravitate to specific levels of support or resistance from prior trading days. there's many ways to identify areas of support plus resistance, from trend lines to slower timeframes, which will enable you to adjust your trading according to how the market moves around these important levels.

Step 3: EXECUTE THE TRADE!

Once you've identified the ideal trading opportunities & made the proper adjustments to your trading system, it's time to execute the trade. To do this, Patience & Discipline are of utmost importance. Having patience & discipline, when you're waiting for your perfect trade set-ups, will intern help you become a consistent trader. This is accomplished by let your Rules trade for you, not your emotions! Once you permit this to happen, you will finally see Consistency in your trading.

No matter where you are in your day trading career, whether you're starting out or have been trading for a decade; these five easy steps will improve your trading.

Stock Trading Market

A stock market, or equity market, is a private or public market for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.

The size of the world stock market is estimated at about $36.6 trillion US at the beginning of October 2008. The total world derivatives market has been estimated at about $791 trillion face or nominal value, 11 times the size of the entire world economy. The value of the derivatives market, because it is stated in terms of notional values, cannot be directly compared to a stock or a fixed income security, which traditionally refers to an actual value. Moreover, the vast majority of derivatives 'cancel' each other out (i.e., a derivative 'bet' on an event occurring is offset by a comparable derivative 'bet' on the event not occurring.). Many such relatively illiquid securities are valued as marked to model, rather than an actual market price.)

The stocks are listed and traded on stock exchanges which are entities a corporation or mutual organization specialized in the business of bringing buyers and sellers of the organizations to a listing of stocks and securities together. The stock market in the United States includes the trading of all securities listed on the NYSE, the NASDAQ, the Amex, as well as on the many regional exchanges, e.g. OTCBB and Pink Sheets. European examples of stock exchanges include the London Stock Exchange, the Deutsche Börse and the Paris Bourse, now part of Euronext.

Stock Trading and Stock Exchange.

A stock exchange is an organization that provides a marketplace for either physical or virtual trading shares, bonds and warrants and other financial products where investors (represented by stock brokers) may buy and sell shares of a wide range of companies. A company will usually list its shares by meeting and maintaining the listing requirements of a particular stock exchange. In the United States, through the inter-market quotation system, stocks listed on one exchange can also be bought or sold on several other exchanges, including relatively new so-called ECNs (Electronic Communication Networks like Archipelago or Instinet).

In the USA stocks used to be broadly grouped into NYSE-listed and NASDAQ-listed stocks. Until a few years ago there was a law that NYSE listed stocks were not allowed to be listed on the NASDAQ or vice versa.

Many large non-U.S companies choose to list on a U.S. exchange as well as an exchange in their home country in order to broaden their investor base. These companies have then to ship a certain number of shares to a bank in the US (a certain percentage of their principal) and put it in the safe of the bank. Then the bank where they deposited the shares can issue a certain number of so-called American Depositary Shares, short ADS (singular). If someone buys now a certain number of ADSs the bank where the shares are deposited issues an American Depository Receipt (ADR) for the buyer of the ADSs.

Likewise, many large U.S. companies list themselves at foreign exchanges to raise capital abroad.

Article source: htttp://en.wikipedia.org/wiki/Stock

Stock derivatives?

A stock derivative is any financial instrument which has a value that is dependent on the price of the underlying stock. Futures and options are the main types of derivatives on stocks. The underlying security may be a stock index or an individual firm's stock, e.g. single-stock futures.
Stock futures are contracts where the buyer is long, i.e., takes on the obligation to buy on the contract maturity date, and the seller is short, i.e., takes on the obligation to sell. Stock index futures are generally not delivered in the usual manner, but by cash settlement.

A stock option is a class of option. Specifically, a call option is the right (not obligation) to buy stock in the future at a fixed price and a put option is the right (not obligation) to sell stock in the future at a fixed price. Thus, the value of a stock option changes in reaction to the underlying stock of which it is a derivative. The most popular method of valuing stock options is the Black Scholes model. Apart from call options granted to employees, most stock options are transferable.

Article source: htttp://en.wikipedia.org/wiki/Stock

Types of Stock Trading

Stock typically takes the form of shares of either common stock or preferred stock. As a unit of ownership, common stock typically carries voting rights that can be exercised in corporate decisions. Preferred stock differs from common stock in that it typically does not carry voting rights but is legally entitled to receive a certain level of dividend payments before any dividends can be issued to other shareholders.

Convertible preferred stock is preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Shares of such stock are called "convertible preferred shares" (or "convertible preference shares" in the UK)

Although there is a great deal of commonality between the stocks of different companies, each new equity issue can have legal clauses attached to it that make it dynamically different from the more general cases. Some shares of common stock may be issued without the typical voting rights being included, for instance, or some shares may have special rights unique to them and issued only to certain parties. Note that not all equity shares are the same.

Article Source: htttp://en.wikipedia.org/wiki/Stock

Stock Trader versus Stock Investor.

Individuals or firms trading equity (stock) on the stock markets as their principal capacity are called stock traders. Stock traders usually try to profit from short-term price volatility with trades lasting anywhere from several seconds to several weeks.

The stock trader is usually a professional. A person can call themself a full or part-time stock trader/investor while maintaining other professions. When a stock trader/investor has clients, and acts as a money manager or adviser with the intention of adding value to their clients finances, they are also called a financial advisor or manager.

In this case, the financial manager could be an independent professional or a large bank corporation employee. This may include managers dealing with investment funds, hedge funds, mutual funds, and pension funds, or other professionals in equity investment, fund management, and wealth management. Several different types of stock trading exist including day trading, swing trading, market making, scalping (trading), momentum trading, trading the news, and arbitrage.

On the other hand, stock investors purchase stocks with the intention of holding for an extended period of time, usually several months to years. They rely primarily on fundamental analysis for their investment decisions and fully recognize stock shares as part-ownership in the company. Many investors believe in the buy and hold strategy, which as the name suggests, implies that investors will hold stocks for the very long term, generally measured in years.

This strategy was made popular in the equity bull market of the 1980s and 90s where buy-and-hold investors rode out short-term market declines and continued to hold as the market returned to its previous highs and beyond. However, during the 2001-2003 equity bear market, the buy-and-hold strategy lost some followers as broader market indexes like the NASDAQ saw their values decline by over 60%.

Article from Wikipedia, the free encyclopedia.