So, you have been scouring the internet looking for tips and information about day trading? You’ve seen the cool, well dressed stock trader on YouTube standing next to a Lambo telling you that You TOO can be like him/her. Let us cut through some of that marketing garbage and get to the real nitty gritty of trading stocks.
First, it is not an easy way to make money! I know, bummer right! that doesn’t mean it cant be done, many have, and continue to make money in the stock market everyday. Many of the “Gurus” are marketing their products like courses or chatrooms and earn from those business ventures! That should immediately tell you that even if they are a decent stock trader….the way that they are trading will be on the premise that losses can be absorbed by earnings from their “education” services. So, unless you have a ton of capital, it will be extremely difficult to trade like the gurus. (Im not trying to bash stock educators, many of them are authentic in wanting to help traders out)
On the Flip side, there are some really good mentors out there that can give you a leg up if you are trying to get into the stock market. If you decide to use an online trading course choose wisely, because it will be capital that you will have to use to pay for that service. I cannot recommend who to seek out in that area as I have trekked the market completely alone……..and have paid handsomely for it, so paying for an education may stave off the many losses you most likely will have anyway!
Trading is HARD. The emotional turmoil that many face is the main reason why many fail. Gambling has a similar intoxicating effect where your vision of becoming rich quick removes logic and reason. One thing that can help curb that mentality is to already have a very stable financial lifestyle. If you are taking a risk with the only savings you have, it may not be the best approach. If you have a decent sum stocked away and you feel impartial to the capital that you are placing in the market then you may not feel that gut-wrenching feeling when a loss inevitably occurs. The Market will be there when you are ready, don’t allow FOMO (fear of missing out) al to make you make rash decisions!
Accept the loss. It is going to happen! Control your risk by making very strict rules about when to turn your back on the market. My current rule, If I have two RED trades I am finished for the day regardless of any opportunity that may come up. My average max daily loss is $200 dollars currently and changes with my account size! With my futures account my average loss is much smaller normally around $120.
Decrease your position size! Starting small is a good way to prevent major losses in your account. If you can profit with minimal share size, then you will be able to gradually increase your positions giving you longevity, which you will certainly need.
Utilize both Short and Long Strategies! Some brokers will not have many shares available to short meaning you will be forced to only strategize to the Long side. This is a huge hinderance as some traders find that, unknown to them, they are much better at trading to the short side than long. This is similar to my situation, I used TD Ameritrade to start my trading journey which did not give me many opportunities to make short side trades. It wasn’t until I expanded to other brokerages that I soon learned I was really successful at shorting low float stocks as opposed to long positions.
BE PATIENT! Not only with your position but with yourself. When I said trading was hard in the beginning, I wasn’t being coy! It is tough. If you take a moment to understand that trading is an ongoing education, that will never end even when you are profitable, you will be in a more realistic mindset.
Be patient with your positions! Sometimes your trades do not resolve quite how you thought or immediately resolve. There have been times when I have made a trade, or exited a trade too quickly and either had a loss or missed out on bigger profit.
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