When you’re involved in day trading, it can often feel like you’re alone, floating around on a life raft in stormy seas. That’s why we’ve created this blog. Each month, we’ll be offering you a solid, tried and true trading tip that will give you the valuable information and support you need. From now on, you won’t be bobbing around on the open sea by yourself. To give you a taste of what is to come, take a look at your first weekly tip.
From earliest childhood, most of us have been taught to choose a course and stay with it until the end. The only way to win is to forge ahead on our original mission no matter how ominous the warning signs may be. We’re told that it’s the people who quit when adversity comes who never get anywhere in life. Although many things your parents told you were totally accurate, heeding this old wives’ tale in your day trading literally can cost you.
Specifically, we’re talking about how you should approach trades that aren’t going well. Your intuition, fed by those parental voices in your head, tells you that you should stick with your trade even if it isn’t making a profit right away. After all, you don’t want to sacrifice your commission and things could turn around any minute, right? The truth is that if things aren’t going well from the start, that’s a very good indication that this downward slide will continue. Don’t stick to your guns; stop the bleeding and get out immediately. Sure, you may have lost the battle, but there are many skirmishes yet to come.
The key is knowing when and what to trade in the first place. Ninety percent of day traders fail because they don’t take the time to learn the art and science involved in this business. Choosing wisely while at the same time being ready to cut your losses is your optimal default strategy. In the end, you will find it to be much more profitable than obstinately staying with a trade until the bitter end. If you’re skeptical, try this trading tip while you’re using a simulator. Over time, you’ll see that it sometimes makes sense to ignore your gut feeling.