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Short Term Trading Thoughts
By Sean Hyman | March 26, 2009
The thought behind looking to daily percentage gainers is that you are spotting where the momentum is going. You are jumping on a train that is already in motion and where the intraday money flow is heading presently.
Also, you are trading WITH the intraday trend and not against it. Instead of trying to call a top or a bottom, which is futile…instead, you’re hopping on board, knowing that the likelihood for the trend to continue (more times than not) is of higher odds than you getting in at the tip top of an intraday uptrend or the very bottom of an intraday downtrend.
This increases your odds and if you couple this with a good risk to reward ratio, you stand a much better chance of success.
Remember that “pros” don’t “bet the farm” but rather they put no more than 1-5% of their capital at risk between their entry and their stop level (times the number of lots they have on). For, this is your true risk.
This means that short term, intraday trading requires a bit more capital because you are usually putting on larger positions for shorter moves AND yet, you still should only risk that small percentage of your account.
Sean Hyman
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Topics: What To Look At In The Market |