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Taking Day Trading
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Diversification of Your Trading Strategy

Diversification of Your Trading Strategy

As we all are aware, the markets are never the same, from one day to the other. So should be the general trading strategies of the professional day trader. Traders must realize and adjust to the ever changing market conditions, from one day to the next. Trading Strategies must be adjusted per the current days market trading action in order for the trader to earn successful trades. 

As of late the overall market conditions contain a great deal of whip-o-tile trading action. The definition of whip-o-tile trading action is when traders see what they believe to be a trend, either long or for short selling however; the trend is short lived leaving the trader with minimal if any profits. Frequently, these whip-o-tile trading ranges can leave the trader holding the bag with a loss or even a full stop loss.

A suggestion we offer in an attempt to minimize the frustration of the whip as well as an attempt to maintain control over losses during these whip-o-tile trading activities - reduce the number of shares traded and widen your stop loss. By widening your stop loss and reducing the number of shares you generally trade, you allow additional room for trades you enter, that whip you around, mercifulness. When trading volume of a particular stock is low or the over all market activity consists of minimal trading volume as a result of a reduced lack of interest for whatever reason, some things have got to give. 

Widened stops may allow you additional breathing room needed while a stock decides to whip around; possibly avoiding taking out your stop so quickly and enabling you increased volatility for a potential profit. While a tight stop is needed when trading a larger sized lot of shares, a wider stop can sometimes give the room needed while in the whip mode while still giving you a chance to make a profit, on the trades you do make. Consider reducing your profit goal; consider reducing the amount of profit you are attempting to make per trade until you develop a successful trading strategy to handle the whip-o-tile market trading action.

For those rookie traders or the traders unfamiliar at dealing with the whip-o-tile trading action the markets have given us of late, be smart – demo trade. Don’t make the mistake of testing a new trading strategy with live trading capital, to do so is just plain stupid. There’s absolutely no reason to take the risk so simply put, don’t do it. Only test a potential new trading strategy while in demo mode.

Take smaller profits because when you’re dealing with a whip-o-tile market, profit is profit. Remember, no two trading days will present the same type of trading opportunities. Adjust and diversify your trading strategy to help you survive the whip-o-tile trading days we experience in the financial markets.

For assistance in developing a trading strategy to deal with the whip-o-tile market activity, traders should consider Training Programs offered and moderated by professionals. More frequent than not, the loss a trader takes on any one trade can be equal to the cost of a priceless Training lesson. So the question is, do you want to take a loss or make that potential loss an investment in your trading career?

November 2009


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