Improve Your Day Trading Results

Short term, or day traders, use price charts all the time to determine whether they should buy or sell.  Day traders normally use charts based on either tick (certain number of trades happen) or 1 min to 10 min timeframes.  They look for buying and selling patterns in the price of the stock to try to figure out when to go in with the least risk.  Since these types of traders are solely focused on the near term action, they are only in a position for a few minutes, and perhaps a few hours at most.

One aspect a lot of people who are day trading fail to take into account is the longer time frames since they are not trading them.  They might be concentrating on a 5 minute chart, which looks long, but fail to realize that the 30 minute chart is near a resistance point and in a big downtrend.  The trader decides to take a long position, only to watch it lose because the higher time frame is in a downtrend and takes over the price action.  Because day trading is an odds game, no matter how good you are or what setup you are playing, some of them are going to lose.   But if a trader were to take the longer term trend into perspective before putting on a trade, some of the losers, or at least higher risk trades, can be filtered out and your results should improve.  At the least, it might help the trader to set a better stop price which risks less, and perhaps to lower the expected gain because of the increased risk.

All forms of trading involve risk, and in the end it just comes down to how good the trader is at putting the odds in their favor.  Becoming a day trader is not for everyone, but the high level of daily action often excites people into giving it a shot who should not be risking their hard earned money.  If traders learning to day trade can learn to keep an eye on the bigger time frame charts prior to jumping in, the end results should show a big improvement over what they are doing now.  This keeps you trading in the direction of the primary, longer term trend, and when you choose to go against that you can tailor your stops and targets accordingly.