Many would-be day-traders of e-mini S&P futures or any other market for that matter, yearn for a “magic formula”, an epiphany that in a short time would bring handsome profits with minimal effort. Perhaps you wonder if such a thing exists. The answer is it appears to. If you have watched or read a play-by-play account of an expert trader executing a trade, you have seen uncommonly difficult choices carried out with reflex-speed and apparent ease.
Since the entire trade is handled in a seamless fashion with a winning result, it appears that such a formula may be what they possess. However, there is no such thing. Instead, this ability, like all abilities, is developed. It is then practiced and enhanced through deliberate effort administered by self-coaching and mentoring. After consistently focusing on acquiring skills essential to profitable trading can the expertise needed to day-trade for a living and subsequent success be had.
Part II: SKILLS NEEDED
Our look at skills needed to succeed as day-traders is divided into two parts: 1) Recognize trade opportunities 2) Profit from opportunities.
Recognizing viable trade opportunities starts with the essential skill of knowing the trend of the market within the time-frame from which we base our trade decisions. Especially for beginners, trading with the trend is highly advisable. Hence, you must be trained to know which highs and which lows are most significant. Without this skill, it is likely you will initiate trades with a greater probability of losing than winning!
The skills needed continue with determining advisable entry areas. On a scale of 1-10, what is your present understanding of trading concepts such as support/resistance, Fibonacci ratios, price action and the impact these have on price behavior? Write your answers.
Little aids profitability like not losing. Unforeseen, even sudden and drastic changes in price can happen at any time. Therefore, set a limit for the risk you will bear. Determine first the most advisable stop-loss price for the trade you are considering. Now base your entry-price off of that. Doing so will likely lessen the frequency your stops are hit and perhaps minimize the distance between your entry and stop-loss prices.
Just what is involved in order to insist on profiting? It is not holding what began as a day-trade for an extended period. Rather, we must protect profits via stop-loss adjustments and use exit targets. Knowing when and where to move stops and which target to favor takes skill. In writing, please describe your abilities in these areas.
Trade participation does not depend on skill however. It depends on money. How much and how to manage it will now be considered.
© Copyright 2008 by Trading Concepts, Inc.
