Articles

There are thousands of equities to choose from and day traders can pick virtually any sort of stock they want. So the first step in day trading is figuring out what to trade. Once one, or several, stocks or ETFs have been selected, the next step is coming up with some ways to profit from them. Here is how to select stocks for Intraday Trading. 1) High Liquidity. Liquid stocks have big volume, whereby larger quantities can be purchased and sold without significantly affecting the price. Since intraday trading strategies depend on speed and precise timing, a lot of volume makes getting into and out of trades easier. Depth is also critical, which shows you how much liquidity a stock has at various price levels above or below the current...

Beginning stock traders know the stock market has regular trading hours - they are open for business between 9:30 a.m. and 4:00 p.m. Billions of shares of stock are traded in the American markets alone, making the markets very liquid and efficient. What beginners may not know is the stock market is also open for business after regular trading hours. Pre-market and post-market trading sessions allow investors to trade stocks between the hours of 4:00 a.m. and 9:30 a.m. during pre-market trading, and 4:00 p.m. to 8:00 p.m. for the post-market session. Compared to the billions of shares traded during the day, after-hours sessions trade only a small fraction of that volume, which invites other problems traders have to consider before...

Every good investor knows that in order to make money on any investment, you must first understand all aspects of it, so let's look at why most trading volume is concentrated at the beginning and end of the day. If you have ever come home from work and used your evening hours to research stocks and place trade orders for the next day, you and others like you are the reason for the first hour high volume. As soon as the stock market opens, a rush of programmed trades enters the market and is quickly filled. Along with the trades executed for retail investors, much of the volume comes from mutual funds, hedge funds and other high volume traders. Another source is day traders who have to set their positions for the day during the first...

A momentum strategy seeks to profit from buying high and selling higher on the long side while selling low and covering lower on the short side. Most traders fail in this enterprise because they haven’t mastered the five elements of a perfect momentum trade. Once in place, the profit and loss statement can improve dramatically, adding significant capital to the bottom line. Trading momentum markets require sophisticated risk management rules to address volatility, over-crowding and hidden traps that steal profits. Market players routinely ignore these rules, blinded by an overwhelming fear they’ll miss the rally or sell-off while everyone else books windfall profits. The rules can be broken down into five elements: selection, risk...

So why do I trade US shares intra-day? The prime mover market in the world is in the US. Here in the UK we are essentially influenced by the US economy and its stock market. How many times, for example, have you seen the London market open at a level dictated by what happened in the US the previous evening after London closed? Of course, the Far Eastern and European markets have an influence, but although they, like the UK, do have substantial domestic and local factors, they are also largely driven by the United States. Clearly there are advantages to trading the principal world stock market rather than the others. For example, you are in at the beginning of a move, seeing the immediate reaction to changing dynamics and trading...

Is trading just a game of cat and mouse? Do we smaller traders - the mice - get noticed nibbling the cheese (profits) on the mouse traps set by the cats (the major player)? A Game of Cat and Mouse In my decades of trading, I've learned many lessons about the market. The chief of these lessons is that I don't know anything about the market; at least, in comparison to the market makers on Wall Street. Think about it. The traders at firms like Goldman Sachs, Merrill Lynch and the like pull down salaries of several million dollars each year. I refuse to believe that they are so richly compensated because they don't know anything. They know a lot! It's their job! As a result, like many individual investors, I engage daily in a game...

There are many ways to trade, but I like combining some fundamental, knowledge or perhaps some news, an understanding of technical analysis, a grasp of how markets behave and the ability to read sentiment as demonstrated in price action, buy/sell pressures and the actual trades printing off - the deals being done. This may sound a little involved but is actually quite easy with a little knowledge, common sense and reading the market. On September 1st I made a list of those stocks that were already benefiting from buying interest, (or selling pressure like some insurers), in the wake of the devastating Hurricane Katrina. Building material stocks, alternative energy stocks, insurers, specialist manufacturers of rescue products were of...

The term Direct Market Access is used often in the industry and yet a lot of people do not know what it means or indeed how to use it. The term, in fact, relates to the use of the order book, a system used by market participants to trade directly with each other by inputting their sale and buy orders and waiting until they match. The system is more commonly referred to as Level 2. The first major benefit of using Level 2 is that it is the main mechanism used by the market to trade. It is used by all of the major traders such as institutional investors, hedge funds, and private individuals. Its benefits are significant as it enables market participants to buy at the bid and sell at the offer price. Consider the following example which...

Today is Monday December 27th and the US is open. Many would say, "oh, what's the point, the action will be thin and the pickings, if any, hard." Well, in my experience, that approach is mistaken. 36 minutes before the market even opened today, I read this story: "Amazon.com, Inc. (AMZN) said Monday the 2004 Holiday season was its "best ever", with the online retailer setting a record of more than 2.8 million units ordered in a single-day, or 32 items per second worldwide. The Seattle-based company said consumer electronics sales was its largest sales category." Again many would say, "oh, the news will be in the price so it's pointless" This is also just plain wrong a lot of the time. I have traded AMZN three times today, all...