When i was a novice and looking for effective ways to gain knowledge, i did not know where to start. Trading at it most basic level is buying low and selling high, if you are a short seller, then you wan to sell high and buy low and the 3rd scenario is to sell time or theta in which case you can make money when the trade goes side ways and you make money by selling time as a premium. The concept on surface is very simple and a 10 year old can understand this if explained properly. What i have done is to start at where anyone new to anything start now a days , you tube! You tube is the best resource for this trade of knowledge. Why? because trading is learning visual patterns and visual is best understood while you are visually engaged. What do i mean by that is reading a book is great for a novel and having a fictional character the way you want to fictionalize it. You idea of a bad ass car is different from mine. You can imagine a fiction and have fun with it the most meaning full way that make sense to you. Pattern recognition is not the same it has to be the same and there is no this way or the other it is a fixed figure and you are trying to make sense out of it.
I remember my first trade based on MACD signal. I was first introduced to the MACD signal and how to use it to trade. The concept of divergence was fascinating and easy to understand. On the surface it is pretty simple concept where you look for divergence and identify positive or negative divergence. I soon out that it does not work that way for short term trading like day trading. In my experience all indicators are lagging and if your time horizon is for long term then those indicators work , but if you are looking to day trade or swing trade then it is pretty difficult to use indicators. i can tell you what works and that is learning Elliott wave principle! Elliott wave some say is very subjective and not reliable. Yes it is very subjective but reliable most of the time. Day trading is a very different animal then swing or long term investment type trading.
In Elliott wave 1-5 motive wave and abc correction wave is the core. You have 5 waves going up or down depending on the trend and the 3 wave abc is opposite to that larger trend. Day trading or swing trading is mostly centered around the 3rd wave. Because 3rd wave is the most powerful wave and that is when you see large price movements . Day traders in general are looking to trade that 3rd wave. The main screener day traders use is to screen for stocks that gap up premarket. Gap ups usually happens in 3rd wave , however it can also happen in other waves like the 1st wave, 5th wave , C wave but the gap ups or gap downs that happen in the 3rd wave is what you want to day trade. The reason i say if you are new to trading , then you must learn elliott wave ( get your free PDF from here ) is because What Elliott wave does is it gives you the bigger picture of where things might go and prepare you according to that and take trades based on that big picture.
Most of you know what they say, “trend is your friend” and Elliott wave can give you that big picture and make you aware of where the larger degree trend is gong and helps you trade accordingly , the direction of the trend. I am going to illustrate this with a live trade that I am in right now.