How To Be An Active Trader and Chart Skills

Active trading – particularly day trading – is highly intense and action-oriented. Day traders are glue to their computer screen for most of the market day, ready to pull the trigger when their system says to enter or exit.

In the stock market chart for a classis day trader, it has among the highest score for discipline, risk tolerance, volatility tolerance, reward expectation, and time commitment – and the lowest scores for patience and time horizon. Charting skill is necessary, in most cases, but quantitative skills are not really needed. A fair degree of investing confidence is needed to select a system and learn it well. Once you learn your system – and an active trader must have a system that he or she knows and can depend on – you must simply have confidence in your system and the discipline to follow the signals generated by the system. By far, the most important requirement of an active trader is the discipline to stick with a system.

A swing trader would need slightly less risk tolerance and time commitment than the day trader, and the stock charts of the position trader would be virtually identical to that of the momentum investor.

 Hints for Successful Active Trading

Discipline, discipline, discipline. Discipline is important in any investing style, but it is absolutely essential in active trading.

Use a direct access broker. You may have to go through a learning curve on the software, but using a direct access broker is the best way to get good executions.