Day trading the stock market is exhausting and a suckers game. Right, at least for most of us. But there is a chance that you can learn to ride the short-term trend and tame the random beast. Two methods come to mind immediately:
- Either wait for news during the market session, bet on it and enjoy statistically the following trend,
- or wait for a day trend to emerge and know how to enter and exit it.
The news method is as simple as it can get. Unfortunately that is the very reason why it often doesn’t work. Too many traders are trying the same thing at the same time. Clearly there have to be many losers.
Some news pops land directly in the arms of bigger players who are just waiting for the small guy to chase the intraday momo and dump their shares into them. Then there are the winners, the quick guys being first with entering the following stampede and also being the first exiting it. They want to be paid!
Conclusion: News trading of individual stocks on an intraday basis is difficult.
Watching for an organic trend of the whole market that often has a deeper reason with broader implications and thus producing movements with longevity, is a more promising day trading system.
Still, trend trading by technical means is also difficult. One basic idea is to trade the stock indices. They often move more smoothly than individual stocks. A smooth move is the friend of the trend trader. The more the price is zigzagging, the higher is the chance to run into the stop loss. Trend trading without a stop loss? Don’t do it. Period.
Day trading in general is difficult, probably because of various reasons. The obvious one is speed. There is no time to think something through, so you need a robust and simple trading system.
But day trading can be very profitable. Trend trading still seems to be the easiest choice of all day trading flavors. This is the same as with trend trading on a larger time scale. For swing traders it is also much more rewarding and psychologically less straining to go with the flow instead of trying to catch the bottoms.
The general idea for day trading small trends of the stock index is to use small pullbacks to have a weapon against the slippage and the “stop fee”, while still being able to exploit chunks of a larger trend.
Nonetheless, and as with all day trading, this has to be learned. A good description alone doesn’t make a good trader. You have to be suited for this kind of trading and you really have to exercise it. A good system together with live advice through a trading room may put you on the right track.