When it comes to learning to day trade any market, we think that the best technique is to learn to trade directly from your chart. Our desired trading strategy is to use price action trading entries, but to put it all together successfully in the long term, you should learn to day trade price action strategies directly from your trading chart. A lot of the old timers still like to trade the DOM, but I think that is because over time they have learned to “read the tape,” or to read the DOM, which in our opinion is nothing more than a very similar skill as to reading a price chart.
If you are seasoned at trading with the DOM and you are a profitable trader, then there is probably no reason to change what you are already doing unless you are uncomfortable with it or simply looking to take your day trading success to the next level. However, if you are not yet profitable, or if you are new to day trading, then we strongly suggest that you read the rest of this post and then make sure you watch the accompanying video at the bottom of the page to see exactly how we use price action trading strategies to trade directly from our trading chart.
Understand that there are many different brands of charting software that will allow you to trade directly from the charts, but the point I want to make clear is that we are talking about entering and exiting trades at the click of your mouse directly on your trading chart. Sure, you can watch a chart and enter your trades from the DOM or even some other trade entry method, but in the long run this takes additional time, and regardless of how fast you can learn to do it, you will be at a disadvantage to anyone that is entering their trades directly off of their charts with the click of their mouse. These critical seconds could mean the difference between a few ticks to a few points in some cases if the market is moving quickly.
I have actually had conversations where many people say entering and exiting on the DOM is faster, but I believe that this is the case only because they are accustomed to doing it that way so in the beginning, it probably is faster. However, if you are trading with the right software, there is no way you could enter, exit and move orders as quickly as you can do it directly from the charts, and I will demonstrate that in the video below to show you exactly what I mean. Remember, if you are able to trade profitably from the DOM, then I’m not suggesting your should change anything. However, if you are new to trading or if you are not yet profitable when day trading, then I recommend you learn to trade directly from the chart for all of the reasons I just discussed.
Now that we have told you that trading directly from the chart is the best practice, you will probably now want to know what software to use. While there are many different options, we choose to trade with NinjaTrader. Most every broker now offers the option to use NinjaTrader software, and it is the software of choice for most of your top brokers as well. There are also some brokers that will offer you their own in-house trading software, and some of them are really good as well. Some that we have actually tested or know that others have tested and that work well are OEC, X_Trader and CQG. Most of these require you to buy a license or pay a monthly fee to use, but the cost is minimal when you consider you need to be using the best tools when day trading against the top traders in the world.
We actually like OEC Trader software by OEC, as it’s free and it works well. Currently, all of us here at PATs use NinjaTrader with CQG data, but I have actually used OEC in the past and really liked their free charting software, and it worked very similar to NinjaTrader, so it’s a good choice if you are just getting started with trading directly from your charts. If you can though, we still suggest that you choose NinjaTrader software because if you change brokers, you can simply continue to use the same software and you will not have to learn to trade a different software, so in the long run, it will allow you to maintain the edge of knowing your trading software intimately! If you would like us to recommend a top broker to you that will allow you to trade with NinjaTrader like we do, then drop us a line and we will point you in the right direction.
Below is a video we created to demonstrate exactly how we use NinjaTrader and how we trade our price action strategies directly from our trading charts.