So someone told you about a guy who turned $5,000 into $2,000,000 by day trading and you started the quest for the trading holy grail. You started reading every day trading book you could find. You bought a couple of day trading systems and day trading courses. You've studied the charts and know everything there is to know about technical analysis. You know all about support and resistance and pivots and trendlines and what not. You understand how to set trailing stops and profit targets. You're ready to put your newfound expertise to work and retire in two years.
Do yourself a favor. Take one of those candlesticks, light it, and then set fire to whatever money you're thinking of risking in the markets because if you attempt to day trade using any of that silliness I mentioned above, the end result will be exactly the same. The only difference is...watching your money burn in front of you will be a lot less damaging to your nervous system.
All mechanical day trading systems suck. They don't work. Not in the long run. If you use technical analysis, you will most likely end up with an empty trading account. The reason is very simple.
Greenspan did not move markets. Bernanke does not move markets. Economic numbers such as the unemployment rate and durable goods reports do not move markets. Computers crunching code do not move markets. PEOPLE MOVE MARKETS. The PEOPLE who buy and sell. This would seem to be self-evident but suprisingly is not and this is why no automated day trading system will ever work in the long run. A computer cannot anticipate what a person is going to do. Especially not a person who has money at risk. And people move the markets. People who run the trading desks of major banks move markets. Guys who run billion dollar hedge funds move markets. Sometimes, an individual day trader who can afford to swing three or four thousand contracts moves markets ( If you don't believe me, do a google search for "the flipper bund". Read some interviews). You and I alone do not move markets. However, if you and I and 1,000 other small traders all go in the same direction at once, we will move the market.
A trading chart shows you what happened in the past. It cannot tell you what's going to happen in the future and it also cannot tell you what's happening right now. Levels and trenlines only hold if a very large amount of money steps up to play at those spots and a chart definitely cannot tell you how much money is being put into action. This is why one should stay away from charts.
What you have to remember is...even if a technical setup works, it doesn't work because it's a technical setup. It works because more money went with the setup than against it. It's all about which way the most money is going. Sharp moves are caused by new money coming into the market and scared money exiting the market at the same time. Everyone is going the same way. A trader must keep this in mind at all times.
I know more than one professional day trader. Guys who have made a lot of money. Seven figure money. They all concentrate on reading the order book. Reading the price action. The information in the bids and offers. If they use technical analysis at all, it's role is very minimal and they will all tell you that normally it's more of a hindrance than a help. They spend their time watching the market depth trader or DOM.
A lot of money can be made day trading but it's not made by reading charts. If you want to be part of the 5% (which is really more like 1%) who make money in the day trading business, you better learn how to read the price action. It's about anticipating which way the most money is going next. A chart will not help you with this but learning how to read the order book will. - 15224
Do yourself a favor. Take one of those candlesticks, light it, and then set fire to whatever money you're thinking of risking in the markets because if you attempt to day trade using any of that silliness I mentioned above, the end result will be exactly the same. The only difference is...watching your money burn in front of you will be a lot less damaging to your nervous system.
All mechanical day trading systems suck. They don't work. Not in the long run. If you use technical analysis, you will most likely end up with an empty trading account. The reason is very simple.
Greenspan did not move markets. Bernanke does not move markets. Economic numbers such as the unemployment rate and durable goods reports do not move markets. Computers crunching code do not move markets. PEOPLE MOVE MARKETS. The PEOPLE who buy and sell. This would seem to be self-evident but suprisingly is not and this is why no automated day trading system will ever work in the long run. A computer cannot anticipate what a person is going to do. Especially not a person who has money at risk. And people move the markets. People who run the trading desks of major banks move markets. Guys who run billion dollar hedge funds move markets. Sometimes, an individual day trader who can afford to swing three or four thousand contracts moves markets ( If you don't believe me, do a google search for "the flipper bund". Read some interviews). You and I alone do not move markets. However, if you and I and 1,000 other small traders all go in the same direction at once, we will move the market.
A trading chart shows you what happened in the past. It cannot tell you what's going to happen in the future and it also cannot tell you what's happening right now. Levels and trenlines only hold if a very large amount of money steps up to play at those spots and a chart definitely cannot tell you how much money is being put into action. This is why one should stay away from charts.
What you have to remember is...even if a technical setup works, it doesn't work because it's a technical setup. It works because more money went with the setup than against it. It's all about which way the most money is going. Sharp moves are caused by new money coming into the market and scared money exiting the market at the same time. Everyone is going the same way. A trader must keep this in mind at all times.
I know more than one professional day trader. Guys who have made a lot of money. Seven figure money. They all concentrate on reading the order book. Reading the price action. The information in the bids and offers. If they use technical analysis at all, it's role is very minimal and they will all tell you that normally it's more of a hindrance than a help. They spend their time watching the market depth trader or DOM.
A lot of money can be made day trading but it's not made by reading charts. If you want to be part of the 5% (which is really more like 1%) who make money in the day trading business, you better learn how to read the price action. It's about anticipating which way the most money is going next. A chart will not help you with this but learning how to read the order book will. - 15224
About the Author:
John Grady has profitably traded futures and stocks for over twelve years. He has published the "No B.S. Day Trading Course", a book and video package offering a day trading education like no other. To understand why you must become your own futures trading system or stock trading system, visit www.nobsdaytrading.com
