Short term trading offers tremendous potential for traders to make not only a living but large amounts of money if done properly. In my opinion it is part art and part science, yet both of those skills can be learned and enhanced over time with the proper tutelage and support.
Now I am not going to sit here and tell you short term trading is easy because it's not. But, if you take the time to hone your craft it can become very profitable. What makes short term trading so difficult is that you have to be tremendously knowledgeable about the markets, mentally and emotionally flexible, and extremely discipline.
The reason market knowledge is so important is because you are going to experience all types of market environments on a more frequent basis due to the time compression. For example, if you are day trading you could easily see a bull market, a bear market, and a sideways choppy market all within the span of a week or even less. Things move faster and change faster when time is compressed forcing you to know how to navigate up markets, down markets, sideways markets, and everything in between. This is often where beginning traders lose money because they can only trade in a momentum market or an up market.
Next, you need to be mentally and emotionally able to handle the changes in trend and volatility. Again, with shorter term time frames things change much faster and you don't have the luxury of time to sit back, wait, and analyze what the market is doing. You need to act quickly and be able to change from long to short or get flat and wait until another opportunity comes along. Emotionally, you need to be willing to be wrong and not hold on to your losers. If you carry them into your next few trades it will hurt your performance.
Lastly, short term trading requires the discipline to act when it is prudent and the ability to follow a strict money management methodology to protect your capital. You must use stop loss orders on every trade and be very aware of your position sizing and adjust it for both volatility and account size.
Jason Dekker is a professional trader and money manager that has made millions of dollars trading the markets. Dekker has also managed in excess of $250 million dollars of client money.
He offers specialized trading courses and a market newsletter called the "Daily Strategy Update" through his website at [http://trading-strategy.com]
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