After everything is said and done, there is only one sure way to calculate a good ‘day trading’ market as far as I am concerned. When considering suitable trades, I use the following formula;
- Current trend + Price movement + The Pivotal Point = Tradable market
It should be noted that this is a simplistic and efficient way of viewing a given market in a technical only viewpoint, however, when executed correctly, this formula is good as any other leading technical-only formula which I have come across.
There is of course additional market fundamentals to be considered by the trader such as economic data, breaking news, bigger trends (i.e. bigger time frames) and seasonal patterns but day traders and swing traders should remember that that their trading emphasis is mostly technical based and any considered market fundamentals have to very current and very major to wane them away from considering immediate market entry points.
The number one reason why most traders fail in day trading in my view is because the above formula (or similar formulas) are representative of extremely large amounts of information and data, which has to be successfully considered by the trader in the minutes leading up to them placing a trade, however, the markets tend to move very quickly and traders often slip up by not taking into consideration some key and vital information which influence the market they are hoping to make money in.
By being informed about major and current market fundamentals ‘before’ considering a market to trade in (with the above formula), the trader can make the process into a easier and more achievable way of entering a fast moving market. Once the trade is placed, the trader switches to assessing the market and keeping abreast of any developing factors rather than considering too much, too often and therefore increase the likelihood of making a mistake or being complacent.
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