If you're new to day trading, the open market can be very exciting. However, inexperienced traders often get caught up in emotion when success demands analytical thinking and objectivity. To succeed, you're going to need skills, experience, expertise, aptitude and a sound psychology. As much as it might go against the grain, the best way to start is to start slow.
Day Trading Versus Position Trading
Unlike position trading, day trading is hard because there are so many time frames above you that can impact your results. By contrast, position traders only have to consider the weekly and monthly traders above them who don't trade nearly as often.
Becoming A Successful Day Trader
Becoming a day trader is like starting your own business. You have to invest money to make money. Many beginning traders are under-capitalized. A good start-up working capital would be in the range of $50,000-$100,000. Some day traders get stuck in the technology trap. They mistakenly believe that the right software or better hardware will ensure success. Nothing could be further from the truth. Technology is only a tool, and it's only effective when you know how to use it. To succeed as a day trader, you must master your emotions and make clear-headed decisions. This doesn't mean making the right choice every time; rather, it means making the best and most informed choice every time. The best decision won't always be the right decision, but a sound decision will almost always trump an emotional decision. Short time frames can break new traders. A heavy loss in a short period of time can be overwhelming, creating feelings of helplessness and clouding good judgement. New day traders who start with position trading based on daily charts learn to process rapid feedback and to better understand their trading results. Learn to look at trading as you would gambling. Allocate a set amount of money for trading and let that amount be only what you can afford to lose. Hard losses come easier when you still have enough set aside to pay your bills. When you start trading, see yourself as a risk manager for your own portfolio. Part of sound trading is buying when the market is low and selling when the market starts to rise. Choose one market and learn all you can about it. Take educated risks and make only high-probability trades. The more you know about your market, the sounder your trades will be. As a day trader, losing money is part of doing business. Feeling bad about losses will only set you up for additional losses. This kind of trading isn't about luck, although many people think it is. Nor is it a get-rich-quick scheme. A day trader's success is determined by self-mastery, a substantial commitment of time and money, and a willingness to learn from experience.