My Blueprint To Becoming Successful Day Trader

My Blueprint To Becoming Successful Day Trader

“A common perception of day traders is that they make quick and easy money, work their own hours, take what holidays they want, all from a laptop and can work from anywhere. Who wouldn’t see this and want to earn their living in the same way. There is a belief that by opening a trading account, reading a book or two or following one of the many signal providers out there, money can be made while you are sunning yourself next to the pool.
For those that believe and attempt this, it’s certain to fail. Day trading is like any other career, one that requires education and training followed by experience. Blindly following signals or guessing is fine for some entertainment, but no one would base a career on this.
I began my day trading journey in 2010 and thankfully, have managed to make a good living from it. As I look back, there are four main areas to becoming successful and consistently profitable trader.
Education
Day trading is not easy. It’s not a get rich quick scheme and despite some common stereotypes, you can’t make quick money whilst sitting on a beach, sipping on a G & T in the long term. Most of us want to walk the easy road and make money without much effort, it’s natural. Some will blindly follow signal providers or a copy trade services, in the hope that they’re following market gurus and can take from their money tree. The reality is, these seldom work in the long term because the followers don’t understand what it is they’re following.
Like any other career choice, you must educate yourself and following this, gain experience. There is plenty of free material on the internet. Start simple, Baby Pips has a great online course for free that will give you a great idea of trading and the various elements of it. Once you have completed this, you will have a better idea of the areas of trading that you will want to explore further. Read more about all the areas that you found of interest and from there you can refine further, which during this process you’ll be discovering what type of trader you’re suited to be.
As you’re reading and learning more, start looking at live charts and applying what you’ve learned, which can be also done for free with sites like TradingView.com. Following one or two other analysts, reading their reports and ideas is helpful as you can see where they draw their trendlines etc. and follow their thinking. The more you can absorb, the better.
One of the difficulties in this education is navigating the many hundreds or thousands of courses out there that promise to make you rich. There are many solid courses out there with good content but equally there are many that are just trying to get you to part with your money. Before you part with your money, research and make sure that there is a good online reputation for the person or company you want to sign up with and be extremely wary of any one promising that you can get rich.
Lastly, never stop learning and reading. You will never know it all and there is always more to learn which will only add to your arsenal as a day trader and can only make you a more successful trader.
Don’t take the easy road, it won’t work. You can’t become a doctor or a lawyer without years of study. The same applies to be a day trader. The fact that you can sign up for an account with IG Index in minutes and physically press the buttons and trade, won’t make you a day trader and likely won’t bring you anything but losses.
Routine
We all have a routine. If you work in an office, you’ll wake, shower, eat breakfast and travel to the office. When you’ve arrived, you’ll fire up your computer, grab a coffee and run through your emails perhaps.
This should be no different as a day trader, even though you may work from home and don’t have a boss keeping a beady eye on you. I’ve found routine to be very important, it adds structure to the day and keeps the day focussed. Trying to trade around a hectic schedule that’s changing, I can’t imagine is easy. Keeping an eye on your trades while driving, trying to look at chart patterns while making kids breakfast likely won’t work.
My routine is defined:
5:00am – Wake, shower and orange juice

5:30am – Fire up Computer and start my analysis of the 15 major currency pairs I trade

7:30am – Market open, watch closely for any moves

9:30am – Check positions and review charts and analysis

10:30am – I can relax more as markets tend to quieten down

12:30pm – Lunch

1:30pm – Prepare for open in U.S.

3:30pm – Trade trough U.S. open

8:30pm – Trade through close of U.S.

10pm – Closing analysis for next day
Find a routine that works for you and stick to it, you’ll be more focussed.
The Art of Trading
Education and routine is only half of the puzzle. There are some great analysts out there that aren’t as successful traders as you’d expect. Perhaps they lack the discipline or are too emotional, who knows. Just because you have great knowledge this won’t automatically translate to profitable trading. Within your trading style, I suggest you set your rules and principles and you maintain enough self-discipline to not allow yourself outside of these.
Rules maybe something like, “I will never move my stop loss”. This is a rule that you must set and never break. It takes a lot of discipline to do this but it’s important. If you change your rules, you’ll find no consistency and it will be harder to really identify your mistakes and not repeat them.
A principle may be not to hold a position over a weekend. You may allow this to happen periodically when market conditions are correct, and you believe your trade is solid.
Accept when you’re wrong on a trade, you’re never going to be right all the time. Go back and analyse why you took that trade and if you can justify it, it’s a good trade even though it didn’t work. This is where an accountability buddy comes in but will cover this in another article.
Set your own rules and principles and stay within those parameters. It will make your trading life much easier.
Psychology of Trading
Last but certainly not least is the psychology behind trading. Being able to deal with the stress of trading is critical to be a successful trader. You will sustain losses. You may have losing streaks. Being able to keep a cool head, control your anxiety and stress levels is a requirement. Stressing and freaking out when you’re in a losing position will not help.
Meditation and breathing exercises can help to reduce these stress levels, exercise and other outlets are important. Steve Ward’s book Trader Mind is an excellent book that offers good practical advice and techniques to reduce stress and his course is well worth attending.
You must be able to trade through your losses, take each new trade independently with a fresh head and focus on the new trade. Do not chase trades, chase losses or become reckless because you “need” to make back your losses. Much like a professional sportsman, if a mistake it made, they will put this to the back of their mind, let that go and move on to the next shot or play.
Find a way to deal with the stress and anxiety that trading will bring, don’t expect it to be easy. Losing money is emotional, learn to live with it as part of your day trading career.”

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Categories: Guest Writers, News, Viewpoint
Tags: daytrading

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