Day Trading For Beginners

Trading the financial markets has become extremely rewarding, for those investors that have mastered the intricacies of intra-day and other short-term trading techniques. Day-traders focus on rapid or short-term day-to-day methods to potentially profit from market movements. The markets traded are usually highly liquid index futures, currencies or stocks. Traders use either intra-day strategies designed to generate buy and sell signals within the same trading session, or short-term strategies designed to be open for a period of up to three days.

If you wish to day-trade then you must develop a strategy, for trading volatile markets that has historically demonstrated the required intra-day or short-term price ranges needed for success. The results from your testing should provide a reasonable expectation of profitability from your chosen market. The best financial markets to trade, in my opinion, are index futures or index forward contracts, which are tradable financial instruments that mimic the movements of stock market indexes such as the Australian S&P/ASX 200 Index

The tradable instrument that can be bought and sold is the SPI 200 futures contract, which is the benchmark product for investors trading or hedging in the Australian equities market. The SPI 200 enables the investor to trade movements in the S&P/ASX 200 Index in one simple transaction, thereby allowing direct exposure to the top 200 Australian companies, without having to trade shares in every single company listed on the index. The main forward and mini forward instruments mimic the SPI 200 futures contract, and are basically no different to trade.

I have developed a mechanical 2-day gap strategy, for trading the Australian ASX 200 forward contract that is currently producing 36% annual compound return. The strategy is designed to exploit short-term market inefficiencies resulting from regular over-reactions to the US equities market. Mechanical trading is an automated method that uses pre-determined entry and exit techniques. Traders that have eliminated human decision making from entry and exit levels are usually more successful than other traders that do not uses these proven methods. It is well documented that professional traders have used mechanical trading, for well over 30 years, ever since the advent of cheap computing technology.