Archive for April, 2009

Stock daytrading has fallen under a great deal of scrutiny over the past few years. It became popular back in the time of the technology stock bubble. The market had a great deal of volatility and stock prices moved greatly during the trading day. Traders saw an opportunity to profit from the volatility and took it.

In stock daytrading all trades are entered and exited all within the same trading day. No trades are held overnight. For some not holding trades overnight gave them a feeling of risk control. Overnight news of global events could drastically move stock prices before the next market open. This is great if the market moves in your favor, but not so great if you are on the wrong side of the market. Stock day traders are able to avoid overnight risks and they consequently miss out on overnight profit opportunities as well.

One factor to be aware of when daytrading stock is your transaction costs. With the increased frequency of trades in day trading come increased trading commissions. It’s always a good idea to factor your transaction costs into your calculations when deciding to use a daytrading system.

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Long term stock graphs give the trader or investor an important "big picture" overview.

A long term, historical stock market chart give you the much needed perspective before trading the stock you are interested in. One month stock charts, also called one month stock graphs are usually the timeframe of choice. There are numerous sources of free historical charts so finding the information you need doesn’t have to cost you anything.

 

Using long term stock graphs is only one piece of the big picture.  Viewing stock charts in multiple timeframes will give you all the perspective you need. Here is a simple timeframe breakdown.

 

Monthly

Weekly
Daily

 

You can even use smaller timeframes such as hourly or even five minute depending on the type of trading you are doing. Stock charts on small timeframe can help you time your entry more precisely although smaller timeframe tend to have plenty of "market noise".

 

Even if you are strictly short term trader such as a stock day trader long term stock graphs can help you stay within the long term trend.
 

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