It’s true that Day Trading has made some people lots of money, but even more have lost. Why is this, and what sets the successful traders apart?
First you need to understand that day trading is a very broad term and this is part of the problem. It covers the short term buying and selling of almost any investment instrument including equities, equity options, CFDs, equity indices, forex, futures, futures option etc. So no-one can say that day trading does or doesn’t work, without talking about what they’re trading.
But regardless of the instrument being traded, it’s essential that traders have a clearly defined plan. This is the first thing that sets successful traders apart. Successful traders have a clear trading plan that specifies what they’ll trade, when and how much, what their profit or loss targets are, when they won’t trade etc. It’s a road map that if someone else picked up, they would instantly be able to follow.
Most people who start day trading do so trading stocks. More experienced traders use leveraged instruments such as CFDs, Options, Forex or Futures, because if they have confidence in their plan, they know they’ll make a lot more money with leverage.
But few experienced day traders got there on their own. Usually they’ll have a coach or mentor to guide and encourage them. And this is the second trait of successful traders. They know they can’t do this on their own and actively seek out someone to help.
Successful day traders also use systems to test and track everything they do. This is critical because day trading is not the sort of thing that when you find the key and that’s it. No, the market is a living organism that constantly changes, and successful traders have systems to continuously measure and test. It really must be taken seriously and treated very much as a business.
But if I were to wrap all this up in one sentance, the successful traders are those who…
“Believe in their Trading Plan and have the Dicipline to follow it“.
So yes, almost anyone can be a successful day trader and enjoy all the benefits of this, but you can’t do this half hearted.
Happy Trading!!!
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