Spread betting financial markets are not something that you want to get into lightly.  They will represent a bit of a risk and may not be the best earning vehicle for everyone.  Having said that, spread betting financial markets are surely a very exciting way to live!  Day traders all over the world have made many millions of dollars and will continue to make more as many of them also lose many millions of dollars just as quick!  Are you scared off, yet?  What does a good spread bet company do for you that you can not do for yourself?

They do not take the risk as they say on all of their web sites that you must make yourself aware of the risks and prepare yourself accordingly.  A spread bet company does not place the bets for you as it is your money, for now, and you need to make those kinds of decisions.  They can help you make them with the information they make available to you on their sites and they can even assist you in finding other information that might put your mind at ease.  When you are betting the spread in many of the markets, you need to have all of that info and more to make an informed choice.

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Even with all of the inherent risks of spread betting financial assets, it is a very easy way of investing your money and the payoffs are immediate and concrete.  You are either ‘in the money’ at the end of a contract lasting, usually about an hour or you are ‘out of the money’ and lose your stake in the bet.  Simple, isn’t it?  It is as far as that goes.  The underlying information is important because of the nature of the commodities and/or currencies you will be betting on.

A spread bet company will assist you in finding the best asset for your attentions and will help you identify your risk tolerance as well as other factors that can influence your choices whether to bet  or not.  After that, it is just the application of several of the calculations that are given to decide which, if any, to invest in today.  Tomorrow’s another day!  That is the beauty betting the spread.  There is always a spread to bet out there and it can be in the stocks, in the Forex, currencies or even, where legal, the sports games.

The best spread bet company for you to get hold of would be the one that has all of that information you need and presents it to you in an understandable way.  This would be followed by a lot of articles and other helps that will allow you to know what all of your options are.   Spread betting financial markets are exactly what they sound like.  You are betting the spread to see whether the value of the asset will go up or down.  You pick the right direction and you win.  You pick the wrong direction and you lose.  It is that simple, yet that involved at the same time!  A spread bet company can help smooth those highs and lows out!

Binary Option Broker Guide is the premiere spread bet company assisting many traders on a daily basis, whether it is spread betting financial markets or stocks. Call them today. Article Source

Traders and Investors alike are constantly seeking winning trading strategies, but these winning trading strategies continue to remain elusive for over 90% of all day traders. Why is that? What is it about winning trading strategies that makes them so difficult to identify? And why must you risk thousands of dollars of your own risk capital to determine if a trading strategy is a “winner” or a “loser”?

To help answer these questions about winning trading strategies, we’ve identified one key aspect of winning trading strategies that can help you to quickly filter out the overwhelming majority of the trading systems and strategies that you come across in your investigation.

This one key attribute of a winning trading strategy can be used to quickly eliminate most trading systems and strategies that you come across, leaving relatively few trading systems and strategies to examine.

The most effective winning trading strategies tend to be the most simple.

Quickly identifying winning trading strategies can be as simple as that. The best day trading strategies and systems tend to be the easiest to understand, learn, and master. They shouldn’t require knowledge of advanced statistical analysis, they shouldn’t require a highly complicated modeling program.

A winning trading strategy will be easy for the average Day Trader to quickly understand, learn, and then execute.

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Discover The Most Simple Winning Trading Strategies! Claim Your FREE Copy Of The Prosperous Trading Video Boot Camp Today! Click Here For WINNING TRADING STRATEGIES!=========================================================================

Consider this: in the world of Technical analysis, most Day Traders don’t really “understand” the indicators they are looking for; they are relying on statistical analysis to “guess” market direction and movement.

But of course, if you don’t fully understand that particular indicator, how it is determined, and WHY the market should behave in a certain way, then can you really be sure that the technical indicator that you THINK you see is really there?  By and large, most technical or trend trading systems are difficult to learn and master, and should not be attempted by anyone but the very most advanced day traders.

But simple trading strategies don’t rely on complicated technical indicators, or trend lines. These winning trading strategies are simple to learn, understand, and execute, and the results show.

As you consider a trading system or strategy, the very first question you should be asking about that particular potential winning trading strategy is, how complicated is it? Is it simple? Do I really understand it?

If you determine that the trading strategy in question is NOT simple, and cannot be easily understood or learned, you can quickly eliminate that particular strategy or system and continue your search, without wasting valuable time in additional due diligence and analysis.

- About the Author: Some of the most simple winning trading strategies can be discovered in the Prosperous Trading Video Boot Camp training series. To claim you very own FREE copy of the Prosperous Trading Video Boot Camp, simple click the following link:Click here for: WINNING TRADING STRATEGIESDiscover winning trading strategies in the Prosperous Trading Video Boot Camp; claim YOUR copy while its still FREE! www.TheGuerrillaTrader.com   Article Source

There is a natural desire, especially by beginning traders, to want to trade excessively. This is not difficult to understand. A day trader cannot make money unless he or she is in a trade; this is the general outlook of most novice day traders. But this line of thinking has some serious faults, and it is important to learn to select your trades in a systematic and emotion free state of mind.

Of course, selecting high-quality trades is easier said than done. At various times, very unproductive trades form set up patterns that can be very enticing. Low probability trades are like the lure of Medusa, they look great at first glance, but can cause serious losses if systematic analysis of the trade is not undertaken.

How do you know the difference between a high probability trade and a low probability trade?

First and foremost, every day trader must make an assessment of whether the trade is with the trend or against the trend. While many popular courses on trading tout the wisdom of trading retracements and identifying peaks and troughs in trading patterns, these are all unsound trading methodologies and I know of few successful day traders who employ them. Great traders are masters at taking what the market offers, and not trying to create trading opportunities themselves. A novice trader’s ability to effectively identify trending patterns is an essential skill because the very best traders trade primarily with the trend. In my view, less than 10% of your trades should be countertrend trades.

Secondly, many novice day traders and a plethora of trading systems rely heavily upon oscillators and indicators to choose potential trades. On the other hand, most seasoned day traders pay close attention to actual price action when trading. Important principles like support and resistance are prime movers in determining whether a trade has real potential. For example, taking a short trade into a known support is the recipe for a losing trade. Obviously, a successful day trader must have the ability and experience to identify known areas of support and resistance to avoid taking trades into these hazardous trading zones. Most experienced traders can spot support and resistance by glancing at a chart; this skill is learned through observing thousands of charts throughout trader’s career. Of course, there are add-on programs to most charting platforms that can spot support and resistance for a day trader who has not acquired the ability to identify support and resistance on his or her own. For some, these add-on programs can be very effective and helpful. In any event, any trade that will lead a trader prematurely into known support or resistance is often a trade that is doomed to failure and it’s important to realize these trades are very low probability in nature. In short, price action is where the real trade selection takes place, and indicators and oscillators supply filtering information to reinforce the strength or weakness of the trade under consideration.

This is among the most difficult concepts to learn in trading, as many day traders are looking for a magic oscillator or indicator that will revolutionize their trading results. I am sorry to report that, to date, no such magical oscillator or indicator exists. Look to identify solid trades in the price action of any chart, and then calculate the potential to profit by identifying where support and resistance will affect the performance of your trade. Many traders use pivots and other predictive indicators to calculate support and resistance. For many years, I was in this camp. As I have grown older, I prefer to identify support and resistance as it develops on the chart, not through some artificial predictive means. This attitude is subjective in nature, and his a choice each individual trader has to make.

In summary, we have looked at trading against the trend and concluded that countertrend trading results in low probability trades, on the other hand trading with the trend results in higher probability trades. We have also noted that known support and resistance are prime movers in determining the feasibility and potential profitability of any trade. Price action is the name of the game, and learning to read and interpret what price action is telling a day trader is the real secret to trading success. If you can master reading price action, it is highly likely you can become a successful day trader.

- About the Author: Learn to trade from a full time trader. All active members may attend FREE daily trading room and receive nightly market recap video (a $495 value). Click here and get your free videos and FREE live trading room. Article Source

It would be very convenient to have a day trading system that worked under all conceivable conditions without fail. Whether the market was consolidating, trending upward, or trending downward the ideal system would churn out profits regardless of prevailing market conditions. Unfortunately, no system adequately deals with varying market conditions that can arise throughout the course of their daily trading session. Obviously, this causes problems for novice and experienced traders alike.

One of the very real problems that day traders experience is adjusting their trading style to the changing personality of the futures market. The very best metaphor that I can conjure is one of fishing. To say the least, fishing is a fickle pastime to engage in. There are days that fish attack a certain type of lure, yet the very next day the exact lure will prove to be of little value. On some days, you’re choice of lures may change throughout the course of the day. The point is a simple one, what works at one point of the day may not work later in the day, or even the next day. In fishing, you have to be flexible and adjust your fishing style and bait to meet the ever changing water and weather conditions.

It’s really not so different when trading. On certain days one set up will consistently result  in profits. On the other hand, the very next day the same set up will produce nothing but losses. I don’t have a rational explanation for this phenomenon other than explaining the market is constantly changing and evolving. Your ability to determine which trades will be a profitable on a certain day is a core skill.

For example, on most days the market tends to honor support and resistance levels. Time and time again the price action will advance and decline to previous support and resistance levels and change direction. Of course, this makes for some very accurate trading for those who are familiar with trading support and resistance. On the very next day however, the market may pay no attention to support and resistance and blast through your support and resistance level as though they did not exist.

What does this mean for you as a trader?

It is essential that you have a number of trades in your trading arsenal and approach the next trading opportunity with a different set up. In my experience, after a few test trades I can usually find the trading setup that is effective for that day. On the other hand, many traders labor away with their preset trading style and endure substantial losses. It is imperative that you ascertain the mood and tenor of the market so that you’re able to match appropriate trades to that day’s particular trading session.

This takes some experience and experimentation to perfect. However it is imperative to adjust your trading style within the overall framework of your trading methodology to meet with changing market conditions. Staying with a trade that worke yesterday but is not working today will results in certain losses. In my own trading, I use a number of setups based upon price action, indicators, and oscillators. I have yet to find a day that one of these indicators would not set up a profitable trade. The secret is to find which setups and/or configurations of setups that will be most effective.

I do say this was one caveat; it is very difficult to trade consolidating markets and I have yet to find a truly effective methodology to profit in markets that are trading in a very narrow range. It is my recommendation that you avoid trading markets that are range bound as they are generally difficult and unprofitable to trade.

- About the Author: Learn to trade from a full time trader. All active members may attend FREE daily trading room and receive nightly market recap video (a $495 value). Click here and get your free videos and FREE live trading room. Article Source

Anyone who watches daytime television is well aware of several news networks that broadcast nonstop financial news. Generally speaking, these networks parade a variety of experts in front of the camera who spout all sorts of interesting and apparently insightful information about market conditions during the day. Early in my career, many years ago, I faithfully listened to all the rumors and innuendo the financial news network’s reported. At some point in my career, I learned to turn the television off and simply trade the chart in front of me.

This is not to say that day traders should not be aware of the daily economic announcements the government and government subsidiaries publish. These are very important announcements and should warrant your attention. However, the never-ending stream of talking heads that grace your television screen are not worthy of your attention. Often times they spread information that is unsubstantiated and rumor, which can affect your trading strategy and trading timing in an adverse way. Let’s face it, the really successful traders do not appear on television and divulge their trades for the rest of the world to duplicate.

Aside from the misinformation, there is an even more important dynamic to consider when watching the Financial News Networks. The announcers and individuals being interviewed can have a decided effect upon your psychological outlook on the market movement during the days session. It is important to keep a tight rein on your emotions when trading, as an outside stimulus, like spurious news reporting, can often cause your trading to become biased. This bias can have very unfortunate and costly ramifications and you’re trading. For that reason alone, I generally listen to music while I trade. In short, I make an earnest attempt to avoid any outside influences on how I view the market and reserve my judgments for the information I glean from the trading chart.

This may seem a little nitpicky at first glance, but a steady diet of news that amounts to speculation and innuendo can cause you to take trades or establish positions that may not concur with the information on your chart. Yet because you have heard certain information on the television you may feel comfortable in taking these contrarian positions based upon the conclusions of the television personalities. To be truthful, there have been several occasions where I have found myself in this exact position and made unwise trading decisions based upon recommendations and conclusions television personalities have expressed during the course of the day. To my disappointment, none of these prognostications became reality and I was the unfortunate recipient of a losing trade. About 10 years ago, I learned to turn the television off and my trading improved. The television is one distraction that is simply not necessary. Using proper support and resistance along with sound trading methodology is all that is required to be a successful trader. The talking heads on television certainly are not an asset to your trading experience.

Oddly enough, I seem to enjoy listening to the television personality’s blather on about various happenings in the market for entertainment. Unfortunately, I learned that at a subconscious level I was gathering information and incorporating it into my trading decisions, despite the fact that I was well aware that the information was of minimal value. My point is a simple one; use trading methodology and the chart in front of you, along with the daily government and government agency announcements to formulate your trades throughout the course of the day. There is no reason bias your thinking by exposing ourselves to the random meanderings the financial television personalities spew forth.

In summary, I think it’s important to trade based upon the price action and trading methodology you have learned and see little value in the rumor and speculation the financial networks disseminate throughout the course of the day. To be sure, once you have established a sound methodology you can depend on that methodology to trade without the input of your television.

- About the Author: Learn to trade from a full time trader. All active members may attend FREE daily trading room and receive nightly market recap video (a $495 value). Click here and get your free videos and FREE live trading room. Article Source

Countless numbers of day traders spend their time and money searching for that magic indicator that will unlock the secret of trading profits. To be sure, I have seen aspiring traders purchase trading program after trading program in search of the new indicator that will send their trading profits soaring. Unfortunately, no such indicator exist and it is unlikely that a magical indicator will be developed that can revolutionize profits for the e-mini day trader.

On the other hand, thousands of e-mini day traders successfully trade every day without any wondrous and magical indicator. Of course, it would be much more convenient to have an indicator that unlocks the secrets of e-mini trading. To date though, we are far from developing any such trading tool. So that leaves us with the trading tools we have at hand, and there certainly is no shortage of indicators for the e-mini trader to utilize. The question remains, though, which indicators are the best ones to utilize?

While some indicators claim to be leading indicators, that is to say that they have a predictive quality in their results, the evidence suggests that this predictive quality is sketchy, at best. Most indicators are lagging indicators and indicate the status of current trends based upon recent history. As any good trader knows, recent history can be helpful, but the market contains a random element that can easily deviate from past history. We are left with indicators that give us, at best, an educated guess as to the path the market price action will take in the near term future. In short, short-term trading can be a rather inexact science, at best.

One important aspect of trading is often overlooked by traders who depend solely upon indicators and oscillators to time their trades. In my world, price action is the driving force in my trade selection. While I do employ oscillators and indicators, their purpose is primarily to confirm potential trades I spot by observing price action. I pay careful attention to support and resistance, volume, and price movement in choosing my trades. Obviously taking trades into known resistance or support it is risky business, at best. Unfortunately, strict oscillator and indicator traders do not have a handle on where or support and resistance may lie and often blindly take indicator or oscillator indicated trades into these danger zones.

Further, price movement and price analysis can give a trader a unique view in which the market functions. Specifically, I analyze each bar and note whether the bars make higher highs and higher lows. Conversely, I am also interested in the opposite price action, and that is whether the bars are making lower highs and lower lows. Each of these price formations can be indicative of potential market moves in their respective directions. From there, I can have a good look at my oscillators and indicators to determine the strength and velocity of these potential moves and decide whether or not the trade is a high probability or low probability trade.

Price action, along with support and resistance and volume, are often overlooked in trade selection. But learning to actually read price action will give any trader a much better understanding of what is actually happening in the market and provide the trader with insight into high probability trades and conversely, help him or her avoid low probability trades. Very few traders are excited about entering low probability trades and seek to avoid them at all costs. It is my contention that ignoring price action and relying strictly upon oscillators and indicators will often lead traders into low probability trades.

A second common mistake made by oscillator traders is the failure to recognize the trend in the market. Regardless of whether the oscillator or indicator being used indicates a nice trade, if it is against the trend you will often find yourself on the losing side of the trade. From a statistical standpoint, a trend is likely to resume (after a short retracement) 80% of the time. Obviously, trading with the trend is a habit all traders should cultivate. The only way to truly ascertain whether or not the market is trending is by observing the price action and subsequent retracements.

In summary, we have stressed the importance of observing price action and the benefits price action has to offer traders. Trends, retracements, and then market noise can all be identified very easily by observing price action. We have also noted that strict oscillator trading can often lead a trader into low probability trades, which should be avoided. Watch the price action and you’re trading will improve immeasurably.

- About the Author: Learn to trade from a full time trader. All active members may attend FREE daily trading room and receive nightly market recap video (a $495 value). Click here and get your free videos and FREE live trading room. Article Source

I see that many spreadbetting traders are sitting on their hands out of the latest stock market turmoil.  Which probably makes the markets even more volatile as the day traders take over and push the futures up and down with very little real volume.  We keep getting two or three share up days followed by another two or three days of falling prices.

I use spread betting for trading this volatility, as there is no commission or stamp duty (just a wider spread) but also there is no capital gains tax to worry about and I try to use the whole allowance on my investments.  The intraday traders (self included) tend to be like sheep following the technical analysis. I noticed in the last bear market that a sharp trader I knew who’d do anything to have an edge in the markets still let his long trades run to target or stop, but he gradually did more short spreadbets. I didn’t do enough shorts mainly because I was focused solely on intraday. Now, I am prepared to go with bull or bear by having separate long and short watch list’s selected on fundamentals – just waiting for the technical analysis.

One thing is for sure – my dividend friggin’ days are over. I just looked at the money made this week column and not the money made…er…lost this month column. I will still beat the market hands down but the objective is to make money not to lose it.  It is difficult to say whether I played a blinder or cocked it up this month. I got some things right e.g. SNR (Senior PLC), CNE (Cairn Energy PLC), MDC (Media Corp PLC), VGM (Vatukoula Gold PLC), MML (Medusa Mining PLC), DDT (Dimension Data PLC) and even FXPO (Ferrexpo PLC) yesterday. And I got some things wrong..mostly things that I sold that then went up again and I didn’t buy back e.g. SOLO (Solo  Oil PLC), BAO (Baobab Res.PLC). And then there are some things I bought back that carried on down e.g. CHNS (China Shoto PLC).

These ‘wild’ weeks are difficult. One doesn’t’ know whether it’s the start of something really nasty or just a correction. I can’t afford to lose money so I take a defensive stance, selling and buying back. When you get a rebound, it generally would have worked out better to have sat it out but in 2007 that was not the case. How does one know? I therefore prefer to accept lower gains for safety but it isn’t half frustrating on weeks like this.

What does work for me is the notion that one has to be first out and first back in. Waiting to be last out and first back in, or even last back in is just a money loser.

This time I did things a little differently. I didn’t sell SNR (Senior PLC),, I added. Ditto MML (Medusa Mining PLC), and CNE (Cairn Energy PLC). That’s a bit of shift for me and I’m delighted with outcome. I did sell DDT (Dimension Data PLC) and that went rather well. MONI (Monitise PLC) I screwed up. Sold at bottom and bought back higher. Doh.

So…the .FTSE looks to end mid-year some 6% down, against which I am likely to end down just below 1% and, at worst, when FTSE was down 11%, I was down 1.5%. Not bad but I may have to buy budget toilet paper for a month as a punishment for not doing better.  I am up on the year, so doing well there as well.  Phew.

- About the Author: Find out more about spreadbetting on our financial spread betting education guide Article Source

For many years people from all walks of life have wanted to learn how to day trade. If you ever thought about learning to day trade, you should read this article on day trading and what is needed to be a successful day trader.

Most people think of big money, and a great life style when referring to successful day traders.  Becoming free of your boss, and losing the 9 to 5 job has its perks. The best feeling a day trader has is the instant gratification one gets from consistently being profitable.  All these things are true.  You can change your life for the better.  You don’t have to work long hours in a job you hate.  Day trading is by far the only way you can be independent from anywhere in the world.   But not everyone can succeed in day trading. More often than not traders without experience jump into day trading without understanding exactly what to do.  You wouldn’t fly a plane without first learning the important steps needed to fly a plane.  The result would be a crash and burn.

Professional day traders guard their trading secrets.  Remember that big money needs the little guy to take from.  Most aspiring day traders start their journey by joining a chat room, or following advice in forums posted by unsuccessful traders. Since no College degree exists to learn how to day trader, you must educate yourself on the art of day trading the right way.  Books and DVD’s offer insight and theory but fall short when it comes to real life experiences.   Only by learning side by side with a professional the actual methods the insiders use, will you have the ability compete on a level playing field.  Otherwise it’s like taking candy from a baby, and you are the baby.

If you are a beginner trader or an experienced trader, DayTradeToWin is now offering a private mentorship program designed to teach you the actual methods used by professional day trades to beat the market. This is a complete program offering you one on one with the trader and founder, John Paul as he shows you and teaches you the missing links of trading.  The Classes are held multiple times a week during the trading day. The program has been extremely successful with traders. “It’s the A-ha moment that I love to hear from traders”, says John Paul, founder of DayTradeToWin.

Most traders have the basic information on trading, but a complete package from A- Z is a necessity to success.  Most trades don’t see the entire picture when trading.  There is a road map that each trade needs to follow. These precise techniques are taught, and will change the way you look at the markets forever. The 6 week program consists of everything you need to become a self-sufficient day trader.  The Atlas Line is also included with the program which is a propriety trading tool only available at DayTradeToWin.  More information on the mentorship trading program can be found at www.daytradetowin.com.

The 6 week program includes the following:

If you would like more information about this exciting new program please contact John Paul and  daytradetowin by email at support@daytradetowin.com or toll free at 888-607-0008

Disclaimer: Day Trading in futures is extremely risky and involves substantial risk of loss. Therefore you should consider carefully whether such trading is adequate for you. Trade only with risk capital-funds you can afford to lose.

- About the Author: John Paul is founder of daytradetowin.com and has been providing educational trading techniques using price action to successfully day trade the emini sp and other financial markets. Article Source

For many years people from all walks of life have wanted to learn how to day trade. If you ever thought about learning to day trade, you should read this article on day trading and what is needed to be a successful day trader.

Most people think of big money, and a great life style when referring to successful day traders.  Becoming free of your boss, and losing the 9 to 5 job has its perks. The best feeling a day trader has is the instant gratification one gets from consistently being profitable.  All these things are true.  You can change your life for the better.  You don’t have to work long hours in a job you hate.  Day trading is by far the only way you can be independent from anywhere in the world.   But not everyone can succeed in day trading. More often than not traders without experience jump into day trading without understanding exactly what to do.  You wouldn’t fly a plane without first learning the important steps needed to fly a plane.  The result would be a crash and burn.

Professional day traders guard their trading secrets.  Remember that big money needs the little guy to take from.  Most aspiring day traders start their journey by joining a chat room, or following advice in forums posted by unsuccessful traders. Since no College degree exists to learn how to day trader, you must educate yourself on the art of day trading the right way.  Books and DVD’s offer insight and theory but fall short when it comes to real life experiences.   Only by learning side by side with a professional the actual methods the insiders use, will you have the ability compete on a level playing field.  Otherwise it’s like taking candy from a baby, and you are the baby.

If you are a beginner trader or an experienced trader, DayTradeToWin is now offering a private mentorship program designed to teach you the actual methods used by professional day trades to beat the market. This is a complete program offering you one on one with the trader and founder, John Paul as he shows you and teaches you the missing links of trading.  The Classes are held multiple times a week during the trading day. The program has been extremely successful with traders. “It’s the A-ha moment that I love to hear from traders”, says John Paul, founder of DayTradeToWin.

Most traders have the basic information on trading, but a complete package from A- Z is a necessity to success.  Most trades don’t see the entire picture when trading.  There is a road map that each trade needs to follow. These precise techniques are taught, and will change the way you look at the markets forever. The 6 week program consists of everything you need to become a self-sufficient day trader.  The Atlas Line is also included with the program which is a propriety trading tool only available at DayTradeToWin.  More information on the mentorship trading program can be found at www.daytradetowin.com.

The 6 week program includes the following:

If you would like more information about this exciting new program please contact John Paul and  daytradetowin by email at support@daytradetowin.com or toll free at 888-607-0008

Disclaimer: Day Trading in futures is extremely risky and involves substantial risk of loss. Therefore you should consider carefully whether such trading is adequate for you. Trade only with risk capital-funds you can afford to lose.

- About the Author: John Paul is founder of daytradetowin.com and has been providing educational trading techniques using price action to successfully day trade the emini sp and other financial markets. Article Source

The last couple of summers have ushered in tremendous price volatility when day trading the ES e-mini contract. There were times when the market volatility was so extreme that normal backing and filling operations (market noise) could easily stop you out of your trade. In fact, if you chose to trade during these volatile periods, you would need nothing short of 20 tick stop loss point. For me, such wide stops increased my risk tolerance to a point where many days were too volatile for me to trade. On the other hand, if you were lucky the market moved in the direction of your trade and you could realize fantastic profits. The key in the last sentence is “luck,” and luck is no way to day trade. So many days I was relegated to watching the market and hoping the market volatility would settle down some, and some days it did and there were good trades to initiate.

In recent weeks the markets have not been very volatile and we have experienced exactly the opposite phenomena as the previous two summers. So market volatility plays a major part in your ability to trade and to select trades. There is, in essence, there is a “sweet spot” in price volatility where traders can prosper. It is important to be able to recognize just where that sweet spot resides, and how to trade an optimal market volatility conditions.

For me, I like to use the Average True Range to get an idea of the market volatility that I can expect on a given trade. Like most things, the Average True Range is not a foolproof system for gauging market volatility, but it gives me a good idea as to what the market volatility has been and buying any unusual trading circumstances what I can expect based upon the last sequence of bars under measurement. I usually use a setting of 14 for the Average True Range.

A rating all about 2 1/2 or 3 seems to give day traders an optimal chance to earn sizable profits while minimizing the amount of risk tolerance a trader must endure. In my trading, as the Average True Range exceeds 4.5 or 5, I generally find myself on the trading sideline past this level of volatility presents too much risk for my appetite.

But there are other measures of market volatility that are worth a look, too.

The VIX is an indicator distributed and calculated by the Chicago Board Options Exchange. The VIX is a weighted basket of option prices based upon the S&P 500 index. While the VIX is directly related to options and option prices it can still be very useful for most traders because it indicates the implied market volatility of the S&P 500 index over the next month. It is often referred to as the “fear index” as it does not indicate a bearish or bullish bias. Rather, it implies in percentage points the amount of potential movement and the S&P 500 index over the next 30 days. As you might guess, this is a very closely watched index and is even traded as such. In my trading, I don’t have any strict interpretations for using the VIX in my intraday trades, but I am mindful of what the VIX numbers are and the potential for movement they may or may not represent. Obviously, a high reading on the VIX, say 20, implies a potential for sharp movement of 20%, either up or down, in the next 30 days. In essence, a VIX reading of 20 warns the intraday trader that there are indications of pending market volatility. That in itself is something that is good to know.

So if talk a little bit about actual volatility and how to much volatility can make trading very difficult and a very stagnant market, with low market volatility can make trading profitably just as difficult. We have talked about a “sweet spot” in the Average True Range readings that seem to be optimal for trading, at least for my style of scalping, or intraday trading. We also discussed the VIX, which is not directly related to chart trading but can be very helpful as an advisory indicator. We have concluded that sometimes the market can be too volatile to trade effectively and by the same token, it can be not volatile enough to be an effective trader. In short, market volatility is a variable that must be considered carefully and compensated for in a day trader’s daily endeavor.

- About the Author: I am a long time retail and institutional trader who now only trades part time, usually in the morning. I enjoy writing informational articles about my style of trading so others may benefit. Would it be convenient to receive valuable trading tips every night in your email? You can sign up for our free video series by Clicking here These videos contain advanced trading strategies and will enhance your trading knowledge immeasurably. Best of all, they are free! So get your free videos and start trading like the pros. Article Source