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Stock Day Trading

Stock Day Trading Tips

Stock day trading is a great way to make money but it is also very challenging. Today’s article lists tips for the stock trader who practices day trading.

1) Don’t overtrade – overtrading is one of the most common pitfalls of day trading stock online. You also don’t want to be on the opposite side of the fence and under trade. You must find a balance that works for you. Find high probability trades based on your set of trading rules that you have established for yourself. If it does not fit your predetermined criteria, don’t trade.

2) Be consistent – the stock market is inconsistent and you cannot rely on it to behave the same way when stock day trading. You must train your brain, and develop consistency in your methods and your trading strategies. Follow your trading plan and only place trades that fit in with your plan. Your job is to be consistent in your trades by trading only high probability trades.

3) Resist the urge to fight the trend! – Amateur traders make a habit of continuously trading against the trend with false hopes that things will turn around. They are constantly looking for things to turn around and go their way. You can profit a great deal from taking the other side of their trades.

4) Trade sane – Only trade stocks when you are in a good state of mind. You shouldn’t practice stock day trading when you are overly emotional due to some event in your life. Never trade after a fight when you aren’t thinking clearly. You must make sure that your mind is in good shape and that your emotions are under control.

5) Keep a trading journal – every trader no matter how advanced or new to trading must keep a trading journal. You must document every single trade you make, how you felt when you made the trade, what you were thinking, and what happened as a result. This will not only teach you how to read your emotions, but it will teach you to repeat good trades, and not to make the same mistake twice. Trading stock online is a very complicated process and one that requires detailed documentation. Not only must you document your trades when stock day trading, but you must also refer back to your trading journal and use it as a reference. You will learn so much about yourself and about how you trade.

6) Join an online forum or free trading room when stock day trading – you must network with other investors and learn from their mistakes as well as your own. Not only can you see what they did wrong, but you can also get feedback when researching brokerage firms or online brokers. You have the potential to learn from another investor’s costly mistake instead of finding out the hard way!

Day trading can be very rewarding but it can also be very costly if not taken seriously. You must take the proper courses, practice online paper trading, develop a trading plan, and stick to your plan!

Market Direction: There is a great comfort when you are on the right side of the market. Candlestick analysis makes for very easy evaluation of which direction a price trend is moving. And when you can accurately see what investor sentiment is doing, huge down days in the market, like we have seen the day, does not affect the psyche. As has been mentioned in numerous past newsletters, the Dumpling Top has been the predominant analytical candlestick factor. Although there has been many individual signals that could have altered the Dumpling Top scenario, the investment strategy always utilized the Dumpling Top information as the primary trend analysis. Even when individual candlestick reversal signals appeared in the trend, those signals required additional confirmation that would have breached the rounding top curvature. Nothing major could be executed to the long side until the Dumpling Top was negated.

We have received a good number of e-mails over the past few days expressing appreciation for the relatively accurate market analysis. These are greatly appreciated but the main purpose for the Candlestick. Forum website is to teach people how to utilize the information in candlestick's for themselves. You'll often hear professed from the Candlestick Forum that investors should not use stock recommendations, put out every day by the Candlestick Forum, as their investment criteria. The picks are put out so investors can see and understand why those recommendations were made. Although the glowing comments are greatly appreciated on how our member commentary had kept them out of being exposed to the market under the Dumpling Top conditions, it is more important for people to learn what the charts are telling them. Mr. Bigalow does not profess to be any great market timer or market projectionist. He merely interprets what the chart patterns are representing. This is not a difficult process. The Japanese rice traders have provided centuries of investment information that can profitably be used in today's market.

The Dumpling Top is a very clear illustration of what is occurring in investor sentiment. It is slowly turning negative. The longer a trend remains negative, the higher the probabilities that fear and panic will start coming in to investors decisions. This now starts the big selling at the bottom of a trend. When the fear and panic start hitting the US markets, the rest of the world will usually follow. Making big profits does not necessarily mean you're in the market all the time. There are times when sitting in a cash position allows you to take advantage of extreme price movements, especially after panic selling has occurred. It is not unusual to make 10%, 30%, or 50% returns in a matter of a couple of days after the candlestick reversal signals reveal the panic selling is over. What happens then? When prices start moving up, the panic sellers then become panic buyers.


One of the major problems for successful investing is our own emotions. We 'want' things to happen the way we analyzed that they should. When things move opposite of what we are expecting, we view the charts with a bias towards what we were hoping should happen. Candlestick analysis dramatically reduces the emotions that go into our investment decisions. It becomes very easy to take one step back and look at a candlestick chart. The analysis of a candlestick chart can be done very easily with one question in mind. "What is the chart telling us?" At that point, an investor can make their decision based upon what they are actually seeing, not what they are hoping for.

Emotions are the most difficult aspect to overcome when it comes to investing. Utilizing correct candlestick analysis completely eliminates that human weakness. Profitable investing involves the correct frame of mind. That mindset is extremely difficult to obtain unless you've got a clear visual format to work from. Because candlestick analysis is the accumulation of investor sentiment put into visual graphics, the analysis process can be done on a much stronger rational basis than on an emotional basis.

Chat session tonight for members at 8 PM ET, bring the kids.

Good investing,

The Candlestick Forum Team

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