Leaving old ideas

While many traders insistently oppose intra-day trade, I will disagree with it. Old clichés which have been given intra-day trade and to intra-day traders should be overestimated and left in the past. As I already mentioned in the previous article, the computer technology, both competitive commission fee and spreads have changed intra-day trade once and for all. Actually, if logically to understand the relation of advantages and lacks of intra-day trade in comparison with item trade “scale” obviously bends for benefit of intra-day trade. Here is my list:

Pro and contra of intra-day trade

Pro

1. There are no anxieties concerning night news

2. More effective profit utilization

3. The forced exit excludes increase of losses

4. Capture of the big price fluctuations

5. Advantage from emotions at positive movement

6. Trade only in the active markets

7. Immediate feedback concerning results of transactions

Contra
1. Intra-day variability can be considerable, increasing risk

2. The constant attention is required

3. Loss of the big global trend

4. Necessity of constant availability of current quotations

5. The profit is limited, as well as losses

6. Active trade that raises costs is required

7. The cast-iron discipline which at the majority of traders is absent is required

There can be also others both pro, and contra. From set forth above, the most essential pro are – a fast exit from losses and immediate feedback concerning the results. Think, properly, about these two convincing advantages of intra-day trade and I hope that you agree with my estimation. But there is enough philosophy and psychology – let’s pass to approaches and methods.

Technical intra-day trade

Pay attention to that I consider that intra-day trader will be absolutely technical trader contrary to the fundamentalist. Though, finally, fundamental factors can manage the market in long-term prospect, they aren’t so important within the limits of intra-day time scale, except for, probably, price fluctuations based on news.

Effective intra-day the trader has methods to grasp the movements arising because of emotional reaction to important news.

In the book “Skillful intra-day trader” I differentiate four basic approaches of intra-day trade from following behind trend before trade from support or resistance. All of them are viable methods which also can be and technical methods of item trade. Further the short review of each method, including their advantages and lacks is resulted:

Break of a trend and following behind a trend

From all methods of trade, the following method of behind a new trend or purchasing on break upwards and sale on break downwards finally can appear to be the most effective. According to it, the trader follows the prices when those move above or more low, entering into the market in confidence that “new maxima generate new maxima” and “new minima generate new minima”.

The trade system on break originates from excellent work of Keltner in 1960 who set the fashion in the various methods exploiting price maxima and minima for the given time format. It gives an ideal situation for the intra-day trader who buys on resistance break. That is characteristic for the given method – though purchasing on break upwards or sale on break downwards tends to work well enough, it is difficult enough for making psychologically for the majority of traders, and it demands, that traders have developed positions, in case of an error. There are numerous approaches for a finding, confirmations and risk managements in trade systems on breaks.

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