Being a trader can be fun especially when you are making good money. However, the fact is that all traders go through the motions. They go through dark periods when things are not going well.
As a trader, you will go through difficult periods when nothing seems to work. In the past, we have seen many traders get depressed. Others have gone to the extent of committing suicide because of the losses.
We know that a career as a day trader is not easy and can be very stressful (so much so that it can lead to burnout, in some cases), but we believe you can find the right balance and live your best life.
In this article, we will look at some of the best things to do to live a happy and fulfilling life no matter the circumstances.
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Why happiness matters
Emotions play an important role in most careers. Ideally, people tend to be more productive when they are happy or doing well emotionally.
The same applies to day traders and investors who make money selecting assets like stocks and cryptocurrencies. Here are some of the top reasons why you should work on being happy as a day trader:
- Peace of mind – In most periods, happiness is accompanied by peace of mind. As a result, you will often make better decisions when you have nothing bothering you.
- Make better decisions – A happy trader will always make more money than one who is not doing well emotionally.
- Avoid revenge trading – Further, when you are happy, you will avoid doing costly mistakes like revenge trading. Revenge trading happens when a trader wants to compensate for a big loss.
- Concentration – Finally, when you are happy, it will help you boost your concentration as you trade.
Realize that you can’t win at all times
A fact you need to realize is that every trade you execute has three potential outcomes: a loss, a profit, or a flat outcome.
As such, there are times when your trades will not be profitable. At times, it is possible that all your trades in a day will end up in a loss.
Therefore, knowing this about trading will help you be prepared about what to expect whenever you execute a trade. As such, you can reduce the risk of losing too much money by doing a few things like proper position sizing, using a small leverage, and always protecting your trades using a stop-loss.
So it is necessary to have the right mindset to be a successful/happy trader. You need to be able to stay focused on your goals, manage losses, work under pressure and have a balanced work life.
Part-time to full-time
The next thing that will help you live a fulfilling life is to start your day trading career as a part-time trader. This is a better approach than when you decide to go full-time in the first place.
When you start as a part-time trader, there is a high possibility that you will have a fallback plan if the trading fails to work.
Alternatively, you should start your career trading in a floor, such as those run by DTTW customers. Being a part of a trading floor will help you reduce your risks and learn from other experienced traders.
Related » Part time vs full time trading
Strategies to achieve your balance
Trade with money you can afford to lose
The first thing you need to do is to trade with money you can afford to lose. This means that you should only trade with money that you don’t have immediate use for. For example, you should not trade with money that you intended to pay school fees or medical needs with.
You should also avoid the concept of borrowing money to trade (so, don’t leverage too much). Doing this exposes you to a lot of risks that you can do without. Instead, you should only trade with money that you don’t need.
Although you will feel bad if you don’t win, chances are that you will not be affected much when you lose the funds.
Take calculated risks
Another thing you need to do if you want to live a comfortable life is to always take calculated risks. As We have mentioned before, risk management is the most important aspect of any trading.
Without proper risk management strategies, no one can make it as a trader. You must know how to allocate capital so that you can make small profits while exposing yourself to little losses.
You must also learn how to end a losing trade. The best way of doing this is to have a stop loss and stick with it. You should not extend the stop loss hoping that the trade will recover.
Have a working strategy
To be successful as a trader, you need to have a strategy that works. Without a strategy, you don’t have any chance of succeeding.
In this industry, the strategy is the most important thing. It involves knowing when to get in and when to get out. It also involves knowing the amount of money to risk for every trade. If you don’t have these strategies, chances are high that you will not be a successful trader.
Take time to rest
One thing We find very fulfilling is that the market closes every Friday and opens on Monday. This is a very important thing because it means that traders from around the world are not trading. As a trader, this gives you the time to rest and relax.
We recommend that you take this time to rest, watch movies, go on holidays, and hang out with your family and friends. As you do this, you can forget about the market, your wins, and your losses.
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Successful investors like sharing their strategies with the rest of the world. Warren Buffet writes a letter every year sharing with investors key ideas of his investments. Other successful investors regularly make presentations on their investment thesis in conferences and seminars. Others like David Einhorn have published their own books.
As a trader, you must learn to share your knowledge with upcoming traders. You can do this by starting a blog or by creating videos. You can also hold seminars. In your talks, you should ensure that you mention your ups and downs. By doing this, you will also gain a lot of insights which will help open your mind.
Learn to be satisfied
Finally, you should be content with what you make. Remember that not all your trades will work out as planned. You might plan for a trade to make you $100. You close the trade with just $40.
Instead of feeling bad about it, you should learn to be satisfied with what you make. Doing this even when you make losses should make you content.
Never forget where you came from
You should never forget where you come from no matter how successful you are. To paraphrase a common saying, when you are going up the ladder, you should not cut the steps that you used. You will need them when coming down.
Remember that no matter how successful you are, chances of making mistakes are always there!
Take the case of David Einhorn who once owned a company called Sunedison. It was one of the best performing solar companies in the United States. A few months after buying a stake, the company went bankrupt.
The same is true with Bill Ackman who used to own a company called Valeant. It used to trade at more than $250 per share. Today, the company is trading at $10.
This shows that we can all lose money. If such a thing happens, who will you turn to?
Being happy has many benefits in day trading. Like in all areas, not all your days will be joyful ones. At times, it will be disappointing when things don’t seem to be going your way. Besides, we are all human beings.
Some of the things you can do when things are not going on well are talking to a therapist, taking some time off, and having a good life and work balance.
External Useful Resources
- Another interesting reading on Eminimind.