In day trading, the ability to be independent is even more important than in other life arenas. That is because in the day trading arena, there is no such thing as “absolute truth” and there is no end of opinion, conjecture, rumor and fantasy. Hope and Greed play their part too, and overall create a landscape of illusion wherein a person with no independent opinion of his/her own will be swept away to rapid destruction…
This stock trading video gives a brief technical chart analysis of the stock market, specifically, the Dow Jones Industrials Index for January 2008.
This makes it clear that for stock trading purposes, the Dow Jones is poised at some very key levels. It is currently on some very major support levels, and hence it needs to hold these levels in order to avert a major collapse to the 11, 650 level, from where even further stock market declines could be easily seen. The negative side of this story is that we appear to have a fully developed and completed head and shoulders pattern, implying the target just stated. However, on the positive side, there are a number of major support points coming in on various time-frames, right at where the market is trading at the time of this trading video.
Novice day traders have little idea how to manage their trading risk,
even as a concept. The typical pattern is that they put on a
trade based upon some fairly poorly defined criteria, and when
the market eventually moves against them, they are clueless as to
when to get out of the position. Instead, they will typically let
the trade worsen until it is eventually too painful to retain.
The experienced trader, however, places risk management at the
heart of the entire trading plan from the very beginning…
During my investment banking career, economists were for me public enemy number one! I never saw what the big deal was about. Most of what they say is completely unprovable. It is always after the fact, and their explanations of forex, stock market or commodity market moves are always retrospective.
The essential problem is that these economic pundits are providing reasons AFTER the fact for why the market has done what it has already done, and they always look good riding on a trend that they imagine is likely to carry into the future.
The key point to come back to is that Online Trading has to be a business, if it is intended to be your primary source of income for yourself and your family. If that is the case, then it is imperative that you treat it with the seriousness that it deserves. That means that even though you may be working for yourself at home, you need to impose some business disciplines that you would find in a standard office environment.
