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Day Trading Basics

Why is Day Trading so hard?

They say that if you don't know what you are doing, ANYTHING is hard. They also say that if you don't know who you are, the market is an expensive place to find out. This is because the whole point of the market is to inconvenience as many participants, as often as possible, especially the beginner. Think about it - if this were not so, then making money stock day trading in the markets would be simplicity itself, and we would all be rich.

To learn from our day trading advice, start by imagining the market as being one of those 'banana boat' fun rides down at the beach. As the speed boat pulls the inflatable banana around, the driver is doing his darndest to throw the passengers off. Some have stronger grips and can hold on longer. Some have weaker grips and fall off while the boat is in the shallows, missing out on all the fun. Those with the strongest grips run the risk of being towed miles out to sea. In the same way, the market twists and turns, searching for your stop loss, trying to part you from your money if you don't hold on tight enough; or even worse, bankrupting you if you hold on TOO tightly!

At every point, if you hold a day trading position, the market will keep sneaking up behind you and shouting 'BOO' in a full-on attempt to scare you into quitting and handing over your hard-earned. You can probably see that the point of this colorful analogy is to reinforce the principle that you need to KNOW WHEN TO ENTER AND WHEN TO EXIT YOUR DAY TRADES.

Day Trading Objectives

Having a good entry and a good exit point everyday is all you need to make serious money day trading on any stock market around the world. This is the purpose of the Camarilla {b} Equation, which tries to provide this information to you while expressing the following 3 principles:-

  • Objectivity
  • Consistency
  • Simplicity

To day trade using the Camarilla {b} Equation, you need only yesterday's Open, High, Low and Close for a stock or other instrument. No keeping track of moving averages, calculating stochastics or other technical garbage. How is it possible for tomorrow's levels to be set today? To be predicted with a stunning degree of accuracy by an equation? Simple. The Camarilla {b} Equation expresses a fundamental truth about any liquid market, and encompasses the basic human day trading behaviour that causes the intraday activity. Now it's time to take a closer look at some of the competing strategies day traders use in order to try and make a buck or two, concentrating on the myths that commonly surround these techniques.