1. Successful traders stay neutral:
It means to remain neutral and not be affected by your trading decisions. Many day traders have been emotionally affected by losing $100 or less, and then they feel like they’re “on top”. They are trading neutral.
If you are like this then you will likely trade with fear and greed. For example, if you are down $100, it is unlikely that you want to take a loss because you know the emotional pain that comes with losing. Although you should make profits, if you are up $1000, you might want to get more. Sometimes you may take profits far too soon, fearing that the position could turn against your. Professionals don’t let daily fluctuations in their account deter them. One week’s results are not important, nor is the monthly. It is a very brief time period in their career. Therefore, the daily oscillations are not important. Beginers are likely to experience emotions. If they have a negative impact on your trading decisions, I recommend you go back to paper trading. This will give you the confidence to keep trading without letting those fluctuations get in your way.
Being neutral is also a way to see price movements for what they are. It is possible that you all have seen the situation in which a trade is losing you and now you are looking for other reasons to hold it. This is dangerous because it causes people to abandon their stops and can result in big losses. Before you open a trade, make sure your entry and exit criteria are clear. You shouldn’t change your strategies while you’re in a trade. There is always a reason your position will move up or downward, but you don’t see the actual price change. Your reaction is changing to prediction. A day trader should never try to predict future price movements. We trade the actual price movement. Not what we believe it should be. You should leave the prediction up to the investors. Many times, I see traders taking positions that they do not understand fundamentally. They also mix investing and trading. This is also very dangerous. This is dangerous too. You can think of Enron.
Yes, there was a point during Enron’s sell-off when trades might have been justified. Even I owned Enron for a very short recovery, from around $8.5 to 10 Problem is that if the assumption that the company’s price is low and it will recover is what you have, then you will be more inclined than ever to hold it or add to it when it drops. It’s harder to make decisions about stock prices based on your opinions. It is strongly recommended that you have a separate account for fundamentally-based trades. Day trading accounts offer too much leverage making it tempting for traders to take excessive risks. While I do not advocate a lack of expectations, it is important to know what your potential trades might look like. However, if those expectations prove to be incorrect, we need to accept this and then react accordingly.
2. They don’t hesitate to trade.
In order to make trades, it is important not to be afraid or lack of confidence. You’ll often let great opportunities pass you by. Or you wait for confirmation that the stock will go your way. This can make it difficult to trade early enough and cause you to chase stocks. Fear of losing money can make it more difficult to take losses. To fear of losing money can cause you to not take any losses or make you lose too quickly before you reach the stop price. Be confident that you can make great trading decisions. You’ll be able to stay patient because you know there will be opportunities. If traders lack confidence, they tend to seek out new trading strategies whenever things go wrong. They’re not able to concentrate on one strategy and master them. Even if a trader is an expert, confidence can slip from time to another. For help, go back to paper trades or small share trading in order to get your confidence back.
3. Successful day traders use no risk capital when trading.
Day trading is risky if you do not have any other income. Fearful money does not win. I have yet seen a trader make enough money to sustain a trading account of 5K without additional income.
4. They only focus on strategies that they like:
Many traders try to implement too much strategy at once. They believe they must earn money every day. Most of the most successful traders I know have only a few strategies they are successful with. Sometimes, it is only one. Finding a strategy that you feel comfortable with is the best way to learn it. This isn’t something that you will do in a day. This is why you should look at (and test) many different strategies before you settle on one. It is important to remember that not all strategies work in every market. It is okay to occasionally sit on the sidelines. There is no need to make money every day. Trade only when the odds favor you and keep your eyes on the game. Once you have established a strategy that is “bottom-line”, you should gradually implement other strategies.
5. They are patient
You must be patient during the learning process. It is okay to trade on paper for some time. You will make mistakes. It will take time for you become more comfortable with your trading decisions. It is important to record your mistakes so you can learn from them. If you are able to trade live, please only trade with a small amount of shares. A small share of shares is not enough to make mistakes. You can lose your whole buying power if you don’t use all of your buying power. I have yet see a trader, even myself, that hasn’t lost a stop at least once. !
Important is patience to wait for trading opportunities. Every strategy does not work every day. Sometimes, you may need to wait for a trade to be profitable. It is also possible to lose a lot of trades. An excellent trader won’t worry about this and will move on to something else. You shouldn’t be trying to make up for lost trades by sitting in front your computer. Set your maximum losses per week, day, and overall. Stop trading immediately when your maximum losses exceed the limit. Don’t forget, there are always new opportunities every day as long as your losses are not too high.
6. They are great money managers.
A good day trader will not take on more than 2% risk in a single trade. This means that, if he has a stop, the amount of cash he is willing to lose will not exceed 2% of his capital. 2% is the maximum. Avoid taking any risk. This is important because even though you may be right 9 out of 10 times, it is possible to lose 10 consecutive times. Sometimes, this could happen to you. Only those who are willing to put up little money will be able survive such a drawdown.
7. Trade with confidence and success:
Trading with confidence has been the most important key to success day trading . Only a few strategies are used by most of the most successful traders I know. The key to their success was their confidence in their trading strategy, the ability to remain neutral, and the ability to execute trades according as they see.