BUSINESS ERA

Jack Bernstein is the publisher of «MBH» weekly articles on the commodity markets and the author of 27 books on trading.
Within-day trade, which was once the exclusive domain of the interests of traders, trading in the exchange hall, is now fair game for all speculators. Encouraged by the large part of intra-day price fluctuations, continued availability of current quotations possibilities of powerful computers and competitive commissions and spreads, a new wave of intra-day trading methods and systems in recent years has attracted thousands of traders. Undeniably sharp sense of commerce in a single day is, however, a two-edged sword that can harm both themselves and become a winner. To be successful, intra-day trader must have the discipline of the machine, the instincts of foxes, serenity stones, surgeon skill and patience of the saint. (I also did not prevent a little bit of luck.) As in intra-day trade is such that it attracts so many speculators in the market? Are there effective methods for intra-day trading? Successful intra-day trading is more luck or skill? Can be studied intra-day trading? Does a successful intra-day trader is different from a successful position trader? Does intra-day trading more benefits than the position?
Determination of intra-day trading

In summer 1968, after the my first few transactions on the commodity market (as it was called then). I quickly learned that the traders trading in the exchange hall, had a clear advantage over the rest of the audience. Traders in the exchange hall at the center of all activities. They knew the prices before they know all the rest. They traded for the minimum fee, and they seemed to know news that affect the price, before all others. During one of my visits to the Chicago Mercantile Exchange, I talk to the former stock exchange floor trader on the balcony for the visitors, and he asked what my trade interests. I said I had to learn how to broker turned to my account and that my knowledge of trade is very limited. He asked me whether I «positional trader» or «intra-day trader». I admit that have not heard any of these terms. He proposed the following definitions: intra-day trader trades in the interim period, one day, entering and leaving their positions during the day, but always close the transaction by the end of the day, regardless of whether they are winning, losing or empty.

This definition seemed to me quite logical. But the definition of positional trade made me stop and think for a moment. He identified the positional trade as intra-day trading, which finishes the day with losses.

After a few moments definition struck me, and I laughed. But under my obvious joy was typical of the market the truth, which never left me since that day. It is clear that the ability to take a loss at the end of the day is likely to be the salvation of many traders, because the vast majority could not accept their losses, when required, in accordance with their system, implying, of course, that they have a system!

Leaving the old ideas

While many traders are strongly opposed to intra-day trading, I do not agree with that. Long-standing cliche that has been given to intra-day trade and intra-day traders should be revalued and left. As I said earlier, computer technology, and competitive commissions and spreads altered intra-day trade once and for all. In fact, if you logically understand the advantages and disadvantages of intra-day trading, compared with the positional trade, the «balance» clearly tilted in favor of intra-day trading. This is - my list:

For and against the intra-day trading

For

1. No concerns nightly news
2. More efficient use of profits
3. Forced Out exclude losses increase
4. Capture of large price fluctuations
5. The advantage of emotions with the positive movement
6. Trade only in active markets
7. Immediate feedback on the results of transactions
Against
1. Within-day variability can be significant, increasing the risk of
2. Requires constant attention
3. The loss of a large global trend
4. The need for continued availability of current quotations
5. The profit is limited, as well as losses
6. Requires an active trade, which increases costs
7. Required iron discipline, which most traders have no
There may be others as the «for», or «against». Of the above, the most important «for» is - a quick way out of losses and immediate feedback on their results. How should these two compelling advantages of intra-day trade and I hope you agree with my assessment. But enough of philosophy and psychology - let us turn to the approaches and methods.

Technical intra-day trading

Please note that I believe that the intra-day trader would be absolutely technical trader, as opposed to fundamentalists. While, ultimately, the fundamental factors can control the market in the long run, they are not so important in the intra-day time scale, with the possible exception of price fluctuations based on the news. Effective intra-day trader has a method to capture the traffic arising from the emotional reaction to important news.


In his book «Capable of intra-day trader» I distinguish four main approaches to the intra-day trade from following the trend to trade on the support or resistance. All of them are viable methods that can also be and the technical methods of positional trade. The following is a brief overview of each method, including their advantages and disadvantages:

Breakthrough trend and following the trend


Of all the methods of trade, following a new trend or a purchase of a break up and sale to break down, ultimately, may prove most effective. According to him, the trader should be the price when they move higher or lower entering the market in the belief that the «new peaks generate new maxima», and «new minima give rise to new minima». The system of trade at the break begins with an excellent work Keltnera in the 1960th, who set the tone in the various methods used in their favor maximum and minimum price for this time format. S & P 500 in the chart below shows the ideal situation for the intra-day trader who buys at the break of resistance. As is typical for this method - although the purchase of a break up or sell to break down, tend to work fairly well, it's quite difficult to do psychologically to the majority of traders, and it requires that traders deployed position, in case of error. There are many approaches to finding, verification and risk management systems for trade breakthrough.

Jack Bernstein
www.futuresmag.com