Part III - How Small Traders Overcome Inherent Disadvantages in Day Trading

Gary Ender from Candlecharts.com shows you how to use candlesticks with pivot points for better trading results.

Continued from Part II...

Introduction
I received the following from Yogesh, a very good virtual trader on howthemarketworks.com. He was unable to post it as a response to my blog so he forwarded it to me. It is an excellent commentary so I am posting it in its entirety and I am responding 'in blue' to it paragraph by paragraph with resolutions to handle the disadvantages to small time traders. Here are his comments and my response: 

Tips
1. Select stocks between $5-$15, with high volume and volatility for quick results. Larger the number of stocks more will be gain/loss. Playing short gives double the profit in this contest (with no relevance to real trading).

In real trading you need to know if the stock is shortable, marginable, and if the stock is available for shorting. Direct access trading software do provide this information.

2. Don’t leave any stock position open overnight. At the end of every day as a day trader only cash shoud be in your account. If the stock gaps up/down overnight you will have big losses. Up is good, but what is the guarantee!

I agree totally! This is not applicable to swing/long term traders.

3. Use 2 different browsers (preferably Fire Fox and Int. Exp.) for short and long to save time (for this contest).

I even try this to trade in two portfolios. In doing so you save a few clicks.

4. Up/down trend lines in MACD, rsi2 and crossover of moving averages is good guides to decide buy/sell (Study this at investopedia and onlinetradingconcepts.com.

This site has 5 chart formations they claim that all traders should know. The information is very good: chartadvisor.com

5. All the websites I mentioned here are free.

I agree.

6. Study Doji, Bullish and Bearish Engulfing, Hammer, Inverted hammer, Hanging man, Morning star and Evening star for reversal in price trend in the charts. (onlinetradingconcepts)

These are candle stick chart formations and you may research YouTube for help on these formation also.

7. Especially for Elena, you experience drop of price as soon as you buy, and price rise as soon as you short, because you are buying at the top of the uptrend line and selling at the bottom of down trend line.

In understanding indicators, chart patterns, and candlestick patters you will be able to avoid such mistakes. Also, if what you are doing you are getting the negative result on a consistent basis, then trade against your original intent. For example: If you were planning on buying long, then sell short instead and vice versa.

H A P P Y T R A D I N G

All the best!