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There are position traders and daytraders. Position traders follow the classic buy and hold strategy. They buy (or short) a stock for the long term. A trade may last for several days or several years. He doesn’t make many trades, his money remains invested most of the time. The position trader profits by big market upswings as in a booming market but also suffers big price declines in a bear market usually. His profit or return is the average price increase of his stock investments. He doesn’t care for smaller up- or downswings during a trading day. A daytrader uses a different approach to trading. He looks for interesting price oscillations during a trading day and is content with much smaller profits than a position trader. His aim is to make smaller profits but more often instead. Daytraders usually make more trades in a single day than a position trader in a month or even a year. Some daytraders make up to several hundreds trades a day. Daytraders provide the market liquidity. Have you ever asked yourself who is buying when a stock is plunging fast? Daytraders do (and of course market makers, too) and they are responsible for almost one third of the NASDAQ volume already. Daytraders also help to narrow the spread significantly because they are able to split the spread by using new sophisticated private order execution networks. A position trader tries to make several points profit with an investment. The average profit of a daytrader usually is between ¼ - 1 point but he tries to get this profit several times. Usually a daytrader doesn’t hold positions overnight, he is ending flat each day. So, every profit or loss a daytrader has made is for real because he is liquidating all his positions by the end of the day. Scalpers Normally we can say the narrower the time frame is, the smaller is the profit. ‘Scalping’ a stock means to go in for a very limited profit in extremely short time, usually a few minutes or even seconds. Scalpers look for 1/8th here, ¼ point there as often as possible. In higher priced or fast moving stocks one point can be a scalp also. Scalping often doesn’t pay if you trade with less than 1,000 shares unless you try to scalp fast moving stocks. A 1/8 point profit is 1,000 x 1/8 = $125 profit minus commission. You must be an experienced trader if you are trying to scalp stocks because holding 1,000 shares of a stock can be very risky if the trade goes against you. Therefore, the motto of a scalper is: Fast in and out with a small but ‘sure’ profit. Trend traders Other traders don’t scalp much but look for at least a ½-1 point profit in one trade. They are in a trade for a few minutes up to one hour. They make fewer trades than a scalper but higher profits per trade. Often a share size of much less than 1,000 shares is enough to make a nice profit. If you are looking for far more than 1 point profit in daytrading you must consider to hold for several hours unless the stock is moving fast or it’s a high priced stock. The advantage is that you can make a good profit with smaller shares also. Share size The time a trader is busy in a trade, the quantity of shares he uses and how much profit he makes, depends on many different details. A fast moving stock promises a bigger profit in short time but also comprises a bigger risk. Bigger share sizes bring bigger profits but bigger losses also if the trade goes against you. A daytrader must be able to overlook all these things and control the risk. Controlling the risk constantly is the most important rule for a daytrader. If you don’t know exactly what you are doing the money will flow out of your account very quickly. On the other hand you can make a serious profit if you work disciplined and stick to the rules. It can take years until you are perfect in trading. You can make several thousands of dollars or you can lose them, per day, or even per trade. There is no need to take big risks to make a living. Most daytraders believe they need to trade the fast moving stocks to make big money but they usually lose the money faster than they can make it. You can make serious money by trading slower moving stocks and lower priced stocks for instance, plus they give you easier control of the trade. If you focus on high percentage trading opportunities only you will make (very) good money constantly. That’s the way Alert-Trading goes. Daytrading is a profession and serious business. You must take it seriously to succeed in the long run. Nobody out there will give you his money voluntarily. You must fight for it, and the better you are prepared the better are your chances to succeed. You must do your homework, learn the rules, train the patterns and get experienced in order execution. This book will give you a comprehensive overview of anything you need to get started. It covers all areas of daytrading and will guide you along the necessary steps. It offers much more than most of the other daytrading books out there because it unveils and teaches a working trading system as well. It goes deep inside the trading process and shows what it needs to make a trade successful. This book is not written by theorists but by daytraders. Take a look at the Alert-Trading trading chat room. There you can see traders trading the style and the system described in this book, live! You can join during market hours and see with your own eyes that the methods described in this book are working. The chat room is maintained by Alert-Trading as the place where daytraders meet to trade the trading system unveiled in this book, together. You, too, can join this chat room and learn from the others and train your trading skills. It will help you to keep focused on the high percentage trades and to stick to the rules. You will learn much by watching the other traders. It will improve your trading skills for sure. This book is your first step to successful trading. It helps you to get started. Read it carefully. When you are ready, join the chat room and let’s trade together!
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