The best way to make effective and profitable day trading picks is to implement a trading and analysis system. A day trading system that is designed to make the most effective day trading picks can be either automated — with a trader's oversight — or manually implemented by the day trader. The key to making the most effective day trading picks by using a system is a consistent application of the predetermined actions of that system. Novice day traders often make the mistake of either micromanaging their system so much as to rob it of consistency or of playing too fast and loose with their own prescriptions for certain market conditions.
Designing a system to generate the best day trading picks is simple but time consuming. A day trader must establish, prior to any actual investment activity, a set of market metric high points and low points that will prompt predetermined courses of action regarding particular investments. For example, before investing in stock A with a value of one point, an investor needs to establish a course of action for stock A if it goes up one or more points and if it goes down one or more points.
An investor will also need to create an action plan for fractional gains and losses as well, with each course of action taking into account overall trading volume in that particular market. Trading volume is the best tangible metric available to quantify both the mood and direction of a particular index at the end of a trading session. Measuring trade volume works better for manually implemented day trading systems, as automated systems often do not fully analyze the incidentals as well as a person can.
To make the best day trading picks, investors need to stick to their system, and they must also be prepared to absorb losses. Many day traders will lose nearly as much as they win, but the ones that stick to a consistent system will usually come out ahead in the long run. One of the most important methods to shorting investment positions is to find the most acceptable low point and to divest either at a predetermined point or at the first sign of a downward trend.
Despite the popular misconception, profit can be made in any economic climate. Steady bull markets offer long term investors an opportunity to make money, while volatile bear markets offer day traders the opportunity to take short positions on oscillating stocks and to turn healthy profits as well. This volatility can make day trading a sound strategy even in fundamentally unsound economic conditions.