3 Secrets of Successful Day Traders
by Bryan Perry 02/03/09
Free Trading Guides
I realize that most of you are not interested in becoming day traders, but I'm not here to tell you how to start a new career.
More Trading Ideas
Rather, I want to share some of the secrets of day traders with you to help you make better trades and, more importantly, to keep you from getting scammed -- and, yes, that does happen more often than you might think.
Secret No. 1: Avoid using physical sell stops on thinly traded stocks.
If daily volume is less than 100,000 traded on a particular stock, it is very easy for market makers to see the "sell stops" of long-side traders and the "buy stops" of short-side traders.
Despite whatever has been touted by regulators, stock manipulation is alive and well … and it is used every day to exploit what is supposed to be a fair and orderly market.
More By This Expert
If you are on the right side of a thinly traded stock (be it long or short), use mental stops instead of physical stops. That way, you won't give the market markers the opportunity to fashion an "unexplainable intraday move" that cleans out all the stop orders before the stock resumes its previously defined trend (be it up or down).
Secret No. 2: Never use market orders on the Amex.
There is a reason traders call the Amex "The Curb."
More By This Expert
6 Options Trading Mistakes to Avoid
Everyone likes to talk about their successes, but it's really the mistakes that teach us the most.
You don't have to buy the same number of contracts with every options trade you make, especially when trading the options of higher-dollar stocks.
This isn't our parents' stock market, thanks to the explosion of the derivatives markets during the past few decades that we can use to our advantage!
Avoid This Simple Mistake When Trading LEAPS
To keep from getting 'ticked' off when trading LEAPS, you need to know exactly what you're buying.
