Top 10 Tips for Day Traders

Day trading can be stressful, it can be challenging, and it can be rewarding. We have put together a list of 10 great tips to keep you at the top of your game and help you become a better day trader.

1. Don’t be stubborn. The market can change, and it certainly will. John Maynard Keynes said “The market can remain irrational longer than you can remain solvent.” Stubbornness can lead to staying in a trade longer than necessary or staying in a pattern goes against where the market is going. Stubbornness will get you nowhere.
2. Have a plan. Every trader should have a trading plan, system, or technique. Without this, trading is more of an emotional gamble. But trading is based on statistics and trends, so to be a successful day trader you need to know how to review these stats and trends and what actions to take as a result of those trends.
3. Practice, Practice, Practice and start small. Those traders who have been successful will usually say that they did a lot of practice trading when they started out. Even when they began actual trading, they started small.
4. When your strategies or systems don’t get your desired results, reach out for help. This could be educating yourself more thoroughly, implementing some more advanced strategies, or turning to a successful trader that can help you figure out what is happening. Don’t wait to deplete your assets or hit rock bottom. Many a trader has made this mistake. It doesn’t have to be you.
5. Mitigate your risks. Never risk too much in a transaction. Also, never risk more of your financial assets than you can afford to. Be methodical in your approach and don’t expect to win the lottery on a trade. You’d be better off buying a lottery ticket.
6. Don’t trade against the trends—you’ll be trading against the “win”. The technical trend of what’s happening in the market is not your enemy, it is your friend. Going against the current will result in losses. Go with the flow and expect more long term gains.
7. Don’t let missed opportunities get you down. There’s really no time for regret, because you can’t change the past. Concentrate on the present moment and the future, not the past. Every trader misses a good opportunity, or several. Stay focused on the trades you are making, not the ones you didn’t.
8. Don’t let fear or panic rule your decisions. When there is really bad news, people get fearful. With a lot of bad news, panic sets in. When the market panics, things can decline rapidly. Institutional investors may decide to dump certain stocks, and the market will inevitably fall. That will be the trend in the short term. This doesn’t mean you throw the baby out with the bathwater. Since day traders can trade short and long term positions, this means opportunities can also be created with this type of panic. Don’t buy in to the hysteria- continue to use your analytical tools, focus, and systems even in a down market.
9. Take your losses in stride. Losses happen. We don’t like them, but they are a reality. They key is to keep going. If you implement #5, your losses should be minimal.
10. Don’t get greedy—this isn’t Vegas. Greedy traders are many times looking for that trade that will provide an unattainable profit or produce some type of immediate wealth. Don’t equate trading with gambling. It’s not Vegas. Trading is a slow, methodical process than can produce both profits and losses. If you get greedy, you can compromise a trade as rational thought is overcome by how much money you can make. Rome wasn’t built in a day, and Buffet didn’t get rich overnight.

by C.E. Burnett