Important Tips for Day Traders

When I started as a trader, my goal was to have a stable, predictable income.  I had tested plenty of trading methods and styles. Then I realized that I had to do something to achieve my goal. Day trading was one of the factors in my success. According to some traders, day trading is too time-consuming and arduous, and you can’t win in the long run. There is also a common opinion that swing trading is ineffective.

I believe that every trading approach has its pros and cons.

Day trading has more advantages than disadvantages.

For me, it’s not profit in one trade, but profit in a day, week or month that matters. If you’re trading daily, your income is adding up bit by bit. If something goes wrong, you can immediately see it and take measures to correct the situation. If you’re experiencing a losing streak during 1 or 2 days, you’ll be able to take the situation under control and improve your trading performance.

If you’re trading long term and your strategy isn’t working, you may find that out when it’s too late. Here’s a question. Is it easier to make money on a 300-500-pip or 30-50-pip price movement? I’m pretty sure it’s 30-50 pips. First of all, there is a psychological factor in play. Second, although you can make an accurate monthly forecast, a market situation may change any minute. Unless you’re pursuing unachievable goals, you can make a small profit every day.

I’m not trying to squeeze every cent out of price movement. For the most part, I close a position once my take profit has been activated. Consistent profits boost my confidence, which is a major factor in successful trading. However, there is a flip side to day trading. It requires lots of attention, patience, and discipline daily. As days go by, you’re getting more tired and less concentrated. If you fail to correctly assess your mental and emotional state, you may end up trading on tilt. After several years of trading, I’ve outlined a few rules for avoiding the problems described above:

1. Trade no more than 2 hours a day.
2. Trade at a certain time of day.
3. Put a limit on a daily number of trades.
4. Avoid setting unachievable goals.
5. Take what the market gives you. Once you’ve achieved your pre-set daily profit, switch off your computer.
6. Stop trading if the market situation is uncertain.
7. If you’ve had 3 losing trades in a row, you should better take a break.
8. Avoid exceeding your daily/weekly limit of losses.

Here is a nice video with more concrete tips for day traders which might be useful for you. Watch it!