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Day Trading — Trend + Momentum = Big Profits
Whether it’s day trading or swing trading, there’s a saying that the trend is your friend. If you’re buying stocks, you want the trend to be bullish (upward trend). When you’re short-selling, you want the trend to be bearish (downward trend). There’s another element that I want to add… momentum. When the momentum is strong in a specific direction, you have a higher chance of profiting than when the momentum is weak. When the momentum is weak in the direciton you want the trend to go, you have a huge chance of taking smaller profits or taking a huge loss.
For those of you reading this who day trade, you understand the importance of picking the right stock instead of “forcing a trade”. When I say “forcing a trade”, I mean you go into a trade with high hopes that the trade will go in your favor, despite what the trade is currently showing you. Which means you see the momentum is dying in the direction you want the trend to go and the trend is reversing against you to the point you’re about to take a loss. Instead of sell to avoid a loss you stick it out just in case the trade moves back in your favor.
Forcing a trade usually happens when you poorly time your entry into the trade and hope that the trade goes in the direction you want it to go.
