Day Trading Strategy: Why Day Traders
The biggest mistake beginning day
traders make is not having a stop-loss exit strategy, or not
following it. As the trade goes against them, they fail to accept
their losses and sell the stock. Sometimes they even add to the
trade! Day Trading is all about risk management. If you fail at risk
management, then you will fail at day trading, because trades will
go against you.
What will you do when you fail to exit
the trade and it drops continuously the next few days until you've
lost 10% or even 20%? You may think the stock will recover
eventually, but this could take weeks, months, or even years to fully
recover. If you are going to day trade, then you have to learn when
to accept your losses and get out of the trade. A poor exit strategy
is a primary reason why traders lose money. Sometimes traders do have
an exit strategy, but then they ignore it once they are in the
Following a good strategy is what will
win you the game, not your emotions or instincts.
Emotions are another big reason why
beginning day traders lose money. What is the point of having a
strategy if you are not going to follow it? All you need to do is get
in the trade, get your 1%, and exit the trade. If you buy a stock and
the price drops immediately to your stop-loss, then immediately sell
it. Eliminate your emotions by just following the rules you have
Read How it Actually Feels to Day Trade
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