As we close out on this series of mini-course on day trading, let us do a recap on the things we have learnt but highlighting some of the crucial mistakes new traders make, and ones that successful day traders don’t. As always, if you have any questions at all, feel free to leave a comment below and we will be happy to help!
1) Unrealistic Expectations
Too many traders get into this business thinking that they can seek out the Holy Grail of trading. They seek a sure-win system that allows them to make tons of money in a short period of time. Unfortunately, the online financial education industry does not help too much in overthrowing this wrong perception of trading that a new trader can have. In short, the only thing that will lead to success in this business is practice and hard work. You need to spend long hours understanding the market and be willing to be humbled by what you do not know.
2) Lack of Discipline
Suppose that you are willing to spend the long hours studying how to day trade, without a good discipline, your knowledge will all go to waste. It has been said that success in trading is all about risk management. Knowing when to cut your losses and when to let your winners run will be the key to determining your profits. However, if you are ill disciplined and trade on bouts of emotions, cutting losses will be a very difficult thing to do.
3) Trading Too Much (Not Focused)
In reality, you do not need to participate in all trades. A critical mistake new traders make is to jump into every trade that looks remotely familiar to what has been taught in the textbook, thinking that it is THE trade each time. There is also the misconception that if you jump into every trade, your odds of winning become bigger. This is untrue. As a day trader, you want to be participating in the set ups that you are familiar with and have a high probability of working out based on your personal experience.
4) Lack of Perseverance (Taking Shortcuts)
Taking losses is very common for a day trader. In fact, 9 out of 10 trades a trader makes can be wrong but it only takes one good trade to recover all the previous losses and then some. If you understand the principles of cutting losses well, this is quite achievable.
Unfortunately, many traders give up before they see the money day. Trading is a game that takes a lot of perseverance to see through to the end result. Well known traders have gone bust a couple of times before being able to finally turn a profit. The key is to know when to keep going and when to stop. Understand your appetite for risk and personal financial stability to be able to answer this question for yourself.
So we have come to the end of the mini-course! Hopefully these few chapters have been beneficial in giving you a deeper understanding of what day trading is and the components that make a successful day trading career. Let us know your thoughts by commenting below, we look forward to you starting your exciting trading career!