RETURN, SUSTAINABILITY AND HEATING: DAY TRADE?

Continuing the series in which I deal with Day Trade, in this post I establish how a series of factors can lead to dissatisfaction with the results of the day's operations. Some points must be observed: Return, Sustainability, and Heating.

When we are faced with Return, one must observe the amount one wants to have in exchange for the time spent on the operation; or, briefly, we can say that Return is the degree that measures your intellectual capital within Day Trade.

I also emphasize that, at the beginning of operations, if you have no experience, Day Trade is a great villain, because you may tend to become very silent or very excited when issuing orders, especially when you start operating with more than one Company at the same time (the data monitoring is practically an eruption, and, in the fear of losing money, you may sell at a price below the Quotation, precisely because you understand that the Company, on that day, does not present a good Return, which leads to loss).

After understanding Return, one must think about Sustainability. More than something that provides return, it is necessary that your capital investment – intellectual and monetary – presents some Sustainability. Sustainability here can be understood as a result taken from a scenario where actions are in harmony, without considering extremes.

With Sustainability, there does not have to be proof that you are yielding in the Stock Exchange, but, without a doubt, it is proof that you are not having losses. Once Sustainability is achieved, the degree of Heating of stocks on the day will give what you can call the Final Result of the Day's Operations in Day Trade.

By Heating it is possible to have a simple function that describes such phenomenon: Heating = Sell Orders / Buy Orders. Considering all orders as executed, you will have a Heating index. If you are buying more than selling, you possibly will not have good Heating; but, on the contrary, if you are selling more than buying, the margin for Heating may be more relevant, provided that, in almost all occasions, the operation yields.

With all these items in mind: Return, Sustainability, and Heating, it can be said that you are already prepared to begin venturing into the Day Trade scenario. The tip I give to those who are starting is to operate, at most, with 3 Companies at the same time in a Trading Session, and to avoid the Freezing of Monetary Values in Companies that present approximate Variations of 0, something that is not good, considering that the spirit of this type of negotiation is to obtain yields based on Market Oscillations.

It is necessary to ensure that there are some coins left at the end of the day after much cognitive effort, isn’t it?