What is trading? What is the game being played?
What’s the difference between trading and investing?
What is day trading and what are the benefits?
No Financial Exposure Overnight
When you hold positions overnight, you can’t react to market-impacting news when you are asleep, so day traders normally do not hold positions overnight or over weekends. These margins increase outside of regular trading hours, presenting another reason not to have overnight positions.
Low Margin Requirements (Compared to Holding Overnight Positions)
Because day trading limits risk by closing positions the same day, brokerages are also at lower risk and can pass this benefit along through the easing of margin requirements.
More Frequent Trading Opportunities
Depending on the style and strategy deployed, day traders may see (and exploit) dozens of potentially profitable transactions every day.
Accelerated Learning Curve
Trading is a skill, and everyone improves skills through repetition. With so many opportunities to trade every day, novice (and even expert) traders will gain experience quickly, learning what works and what doesn’t in far less time.
Can I trade after U.S. working hours when the markets are quiet?
What are the main techniques used by professional day traders?
Scalps are very short-term trades in which the intent is to gain a relatively small profit from the trade with relatively little risk. Scalps are usually based on what the market is doing in the moment, as opposed to having an opinion on where it is going. Scalpers can execute hundreds of trades daily.
There are many types of spread. The main characteristic is that you are trading related products (e.g., crude, natural gas, gasoline, or November crude versus December crude), and there is a temporary discrepancy in the prices that you expect to be “fixed” (mean reversion).
Trading News Events
There are various types of scheduled and unscheduled news. Many traders specialize in understanding how various markets typically react to certain types of news and exploit these moves.
Being able to recognize that a market has momentum in one direction allows you to join the move. Knowing whether news has created that momentum gives you an additional edge because news-driven moves often last longer than moves driven by pure speculation.
Analyzing Order Flow
Although not a technique, by reviewing order flow, it is possible to determine where the next move will be (and its strength).
What sort of tools do professional traders use?
Which indicators or tools do traders need to use?
What is order flow and how does it differ from traditional charting approaches?
What are the advantages and disadvantages of order flow trading?
You see all the available information to make informed trading decisions. Order flow is WYSIWYG—what you see is what you get—and charts don’t show current trades (the only “real” information the market provides). Limit orders can be pulled after the fact, and of course, the tape cannot be altered or manipulated in any way. Using order flow enables a trader to enter at better prices or hold off if the flow is moving in the wrong direction.
The only disadvantage to using order flow in trading is its initial profound impact. When people first discover and understand what it shows, they can become irrationally exuberant and trade too much for their skill or capital (or both).
What are the typical win rates in the professional world?
What is the risk/reward ratio and why is it more important than win rate?
What are margin requirements and leverage?
What do people mean when they talk about liquidity and volatility?
What are the differences between limit, stop, and market orders? (Investopedia)
What is slippage and when is it most likely to occur? (Investopedia)
What are the fees and costs associated with futures trading?
What are the biggest myths about trading?
How should I get started as a brand-new trader?
How much time do you need to devote to trading?
Why do companies like Robinhood allow you to trade stocks for free? How do they make money?
Copyright Jigsaw Trading © 2021
Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.
Testimonials appearing on this website may not be representative of other clients or customers and is not a guarantee of future performance or success.
Note that the Jigsaw Leaderboard contains a mixture of SIM/Live Traders. For many traders, you can click by their name to see the trades along with the SIM/Live designation.
The following is a mandatory disclaimer for SIM Trading results: