how to be successful at day trading

how to be successful at day trading

to be successful at day trading means total financial freedom and be able to pursue a rich and fulfilling life.

Would you like to know if day trading can be successful and if you can take it full time?

Unlike a job where your pay is guaranteed, Day trading is a daily fight to make money.  If you are right, you’ll be rewarded well. If you are wrong, be prepared to face – loss of money, loss of confidence, negativity, emotional turmoil amongst others!

Let’s explore in detail…

What is day trading?

Day trading involves buying and selling OR selling and buying in  the same day before the market closes. You start your day with cash and end your day in cash.  Either with more cash(profit) or with less(loss).

What can you day trade?

Stocks

ETFs

Derivatives – Futures and Options

Commodities

Forex

Cryptocurrencies

Others instruments

I believe, the most popular instruments to day trade are Stocks, Derivatives and Forex.

What can go wrong in day trading?

Money is the first thing you’ll lose.  Money meant for savings or set aside for other expenses. 

Apart from monetary loss, you should be ready for some serious psychological challenges too – you are likely to lose your confidence and get into a depressive and negative state of self blame and self pity.  Your very mind that encouraged you to start trading will curse you non stop for having lost money and take you on a negative “what ifs” story loop.  

It could have physical implications as well.  Lack of energy, anger and frustration are some of them.

What can go right in day trading?

Everything. There can be inflow of money beyond imagination.  

No more living paycheck to paycheck or to be in a job that is not interesting.  

No more worries about the future.  No hesitation to splurge in food, gifts or vacation. 

Who/What are the players you are competing against?

It is important to know who you are trading against.  Although, you may not get to see them, knowing who they are is an advantage.  

Remember, in stock market – “One man’s income is another man’s loss.” brokerage and taxes extra.

The prominent players in the market are:

Robots/Bots/Algorithms

Other smart traders

Hedge funds

Traders with bigger pockets than you

Yourself  – yes you.  One of the toughest parts of trading is to be able to stay focused and disciplined.  We often tend to over trade, trade just because we were bored or we felt we could make a quick buck.  Only to repent later.

What are some of the successful day trading strategies?

Scalping

Breakout

Momentum 

Trading the news

Earnings trade

Price action

Reversal

Algorithm 

While the list may go on..the above ones are the most popular ones.  Notice that this list too has Algorithm trading. Algo trading is available to retail traders like you and me. 

How much money do you need before starting to day trade?

Depends on the market you are planning to trade.  You can start in Forex with as little as $10. But, that is not advised.  

For Stocks trading, somewhere around $25-30,000 is an ideal amount.  

Also, it is important to have a good low cost broker and get yourself required permission to day trade and short sell.

Besides money what else do you need to get started?

While trading can be successfully done from your phone, it is not advisable.  If you wish to be a successful trader, setup a professional environment and be serious about trading.  

Below might be required:

Dedicated space/room for trading with little or no disturbance while you trade.

Desktop/Laptop with 8GB+ RAM.

Dual Monitors with screens setup as per your needs [news/charts+trading buttons]

High speed internet is an absolute must.  Speed is of essence in day trading. 

What are some good habits of great traders that you can follow?

Log: maintain a daily log of your trades and emotions/thought process.  Don’t have to be detailed – short note on what you did. Preferably a paper and pen log – study seems to have shown that our brain learns a lot when we write. 

Like minded people: it pays to talk to other traders.  Even if you are an introvert, try to find a few traders near your area.   When we discuss our issues and ideas a lot of good things come up. You can use meetup.  Stay away from Office colleagues who trade part time.  Align yourself with people who’ve plunged into trading full time just like you.

Always learning: while you may have a good strategy that is going well, it pays to invest in learning about what other successful traders are doing.  Their habits and routines.  

When should you give up?

When you know you’ve given your 100% and things did not work out.  Or money isn’t coming.  

You should not give up blaming others/external factors for your losses.  

Also, when you do decide to give up trading – don’t take it up again because you heard someone else making money.  Don’t relapse.

When you look back at your trading venture, it should be looked up as one of the many businesses you tried.  Not something that triggers negative emotions and pain. 

Is full time day trading for you?

Only you can answer this question after experiencing it first hand.  But before you plunge, you need to make sure you have enough money, you are prepared and you’ve expenses taken care of.  And you also know very well that not everyday will be an income day in the market. 

If you have the mindset ready, go ahead and give trading a try.  

In Conclusion

Nobody is a born trader.  If you are attracted to trading as a full time career – just make sure that you have enough resources to help you try this venture without affecting yours and your dependent’s lifestyle. 

Day trading is akin to seeking enlightenment.  It will show you your innermost nature. It is a quest, where discipline and focus are rewarded and slip ups will cost you a lot.

If I had to start over, i’d day trade stocks a bit and focus mostly on Option strategies.  I’d aim for side income from Options trading before quitting my job. I believe Options trading to be versatile and, with enough know how – one can make a decent income.  Option trading offers a lot of probabilities of success as compared with stock/forex or any other trading where the results are binary.  

You can make money from Options trading even when you are wrong with the stock direction! 

for more information check out the Tool kit section of this website here

Resources mentioned in the article can be bought at amazon:

Powerful Laptop

Desk

Dual Monitor setup

Books

I wish you well.

Anyone in your circle a trader?  – share this article.

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