i think this way we can understand the movment of that stock.
Another question is when a stock goes down with a big selling volumn in a day and for more than a day. should i expect than stock to bounce back or short time maybe or a day, so i can take some profit from it. what are the signs of it bouncing bacnk.
You may choose different parameters for selecting those stocks, maybe their VOLATILITY (u may choose high if u r a risky trader, n low if u r risk averse), LIQUIDITY (volumes), SECTOR (maybe u r able to assess the effects the environmental changes on a particular sector stocks better thn others) n so on.
As far as the 2nd question is concerned, stocks rise n fall, thts wht they do. Volumes cannot be a sole indicator, for attempting to predict its future movement, cz no matter how big expert u are, u may never be able to know whos buying/selling the stock at a particular time n fr wht purpose (cud be a big seller/operator, trying to offload its positions to book profits for the last time, or it may be backed by genuine retail investors, trying to sell after some poor expectations/herd mentality, or cud be due to a heavy selling done by insiders jst before some bad news is gonna be declared)
So its always best, as a trader, to rely more on the technical indicators n chart patterns, that appear to work more frequently in helping you make predictions, n ALWAYS use STOP LOSSES, wenevr u r trading. wtever trading, u nvr know, wen a particular security starts moving against ur expectation, so stop loss helps in minimising losses, if any…
Some of the more commonly day-traded financial instruments are stocks, stock options, currencies, and a host of futures contracts such as equity index futures, interest rate futures, and commodity futures.
Day trading used to be the preserve of financial firms and professional investors and speculators. Many day traders are bank or investment firms employees working as specialists in equity investment and fund management. However, day trading has become increasingly popular among casual traders due to advances in technology, changes in legislation, and the popularity of the Internet.
Trade Frequency
Although collectively called day trading, there are many sub-trading styles within day trading. A day trader is not necessarily very active. Depending on one's trading strategy, the number of trades made in a day may vary from a few to hundreds.
Some day traders focus on very short or short-term trading, in which a trade may last seconds to a few minutes. They buy and sell many times in a day, trading very high volumes daily and therefore receiving big discounts from the brokerage.
Some day traders focus only on momentum or trends. They are more patient and wait for a ride on the strong move which may occur on that day. They make far fewer trades than the aforementioned traders.
Overnight Position
Traditionally it is suggested day traders should always settle their positions before the market close of the trading day to avoid the risk of price gaps (differences between the previous day's close and the next day's open price) at the open. Some day traders consider this to be a golden rule to be obeyed at all times. Some day traders, however, believe they should let the profits run, so it is acceptable to stay with a position after the market closes.
Day traders often borrow money to trade. Since margin interests are typically only charged on overnight balances, the extra costs discourage them from holding positions overnight.
Profit and Risks
Because of the nature of financial leverage and the rapid returns that are possible, day trading can be extremely profitable, and high-risk profile traders can generate huge percentage returns. Some day traders manage to earn millions per year solely by day trading.
Because of the high profits (and losses) that day trading makes possible, these traders are sometimes portrayed as "bandits" or "gamblers" by other investors. Some individuals, however, make a consistent living day trading.
Nevertheless day trading can become very risky, especially if one has poor discipline, risk or money management. The common use of buying on margin (using borrowed funds) amplifies gains and losses, such that substantial losses or gains can occur in a very short period of time. In addition, brokers usually allow bigger margins for daytraders. Where overnight margins required to hold a stock position are normally 50% of the stock's value, many brokers allow pattern day trader accounts to use levels as low as 25% for intraday purchases. This means a day trader with the legal minimum $25,000 in his account can buy $100,000 worth of stock during the day, as long as half of those positions are exited before the market close. Because of the high risk of margin use, and of other day trading practices, a day trader will often have to exit a losing position very quickly, in order to prevent a greater, unacceptable loss, or even a disastrous loss, much larger than his original investment, or even larger than his total assets.
Even when a position has made a profit, the trader has to offset the transaction costs and the interest on the margin. It is commonly stated that 80-90% of day traders lose money. An analysis of the Taiwanese stock market suggests that "less than 20% of day traders earn profits net of transaction costs".
Day trading is considered a risky trading style, and regulations require brokerage firms to ask whether the clients understand the risks of day trading and whether they have prior trading experience before entering the market.
The only trading method that I can suggest would have the most potential for success would be the "50% retracement rule." Of all the methods, this is the most reliable.
There's a book that discusses it. "The Trading Rule That Can Make You Rich" by Edward Dobson.
I can also recommend the following books, they don't discuss methods, per se, but reading them should afford you a better understanding of the markets, which may help you with your trading:
Wall Street: The Other Las Vegas, by Nicolas Darvas.
The Traders, by Sonny Kleinfeld.
The Professional Commodity Trader, by Stanley Kroll.
Fooled by Randomness, by Nassim Taleb.
The Trading Rule That Can Make You Rich, by Edward Dobson.
Reminiscences of a Stock Operator, by Edward Lefevre.
Paul Wilmott Introduces Quantitative Finance, by Paul Wilmott.
The following website offers practical, realistic trading advice: http://commonsensetrading.googlepages.com
) Has anyone found a program (preferably online) that they would recommend for either commodities or day trading?
send an email if you like and I will give you names of a couple of these that are worth investigation. I don't sell any of them and have no affiliation with the companies. Good Luck, Good Fortune, and Keep those very wary eyes WIDE OPEN!!