Day Trade to Win: Follow Your Strategy
Now you have a winning strategy, but will you day trade to win or gamble? Emotion and greed are the
enemies of all day traders. They will destroy you if you don't keep
them in balance. All you have to do is get in the trade while it's
going in the direction you want, get your 1% profit, and get out of
the trade. Don't worry about missing out on a 5% increase, because
you are saving thousands on all the times you would have attempted
that 5% and lost money.
In addition, it will not benefit you if you do not follow it. The
biggest mistake day traders make is ignoring their stop-losses.
If you buy a stock, and it almost
immediately hits your stop-loss, then sell the stock. Yes, you just
bought the stock, but if it is already hitting your stop-loss then it
is very likely you were wrong about the reversal signal and it will
continue trending against you.
Definitely do not add to trade. Maybe
adding to the trade is a good idea when you are planning to invest in
a company long-term, but we are not investing. We are day trading.
When trading with volatile stocks, a trade could move against you by
10% or more. Then, you are stuck either waiting until the stock goes
back up, which could take months, or you are forced to sell at a huge
Again, day trading is all about risk
management. Limit your risk to 1% of your account value. It is also a
good idea to use a mental trailing stop-loss, which simply means you
sell if at any point in time the stock goes against you by 1%. If you
were aiming for a 1.5% gain and the stock goes up 1.4% but then
trends back down, then sell it if it hits 0.4%. This allows you to at
least make 0.4% on the trade instead of losing money.
High Success is Better than Breakouts
Breakouts and huge price moves are
somewhat rare events. If you try to trade huge price moves, you are
going to have a low success rate. However, if you attempt to gain 1%
profit on a stock that moves an average of 5% or more daily, then
your success rate will be much higher, making your strategy more
reliable and realistic to accomplish.
There are a lot of day traders online
who claim to only trade breakouts and who teach that trading
breakouts is the best way to day trade. They convince people that the
only way to be successful is by joining their training program to
learn how to identify these rare events. Guess what? These people are
making money from people joining their training program, rather than
from day trading. No one can predict the future, so it's better to
have a strategy that prevails within the realm of high probability.
While you are calmly getting your 1%
and earning a reliable yearly income, these breakout traders are
developing high blood pressure and heart disease while they watch the
market all day looking for low probability price swings.
Day Trade to Win
Day trading is not a get-rich-quick
scheme: it does take a lot of time and practice to get good at it.
However, day trading can be a part-time job that pays a full-time
income. If you want to day trade to win, then you need to learn as
much as you can about day trading and practice with small amounts of
money before you actually begin trying to make money.
Most day traders lose money, because
they are inexperienced and are unwilling to take the time to get good
at it. Read Learn How to Day Trade in 3 Steps for more information about day trading.
Stocks vs Forex: Why Trade Forex?
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