How To Be A Successful Day Trader
- 3m0•
- 03 Feb 2023
Process Of Becoming A Successful Day Trader
To start with, one needs sufficient skill to negotiate the tricky terrains of day trading. Equally important is patience, without which profits are not likely. By its very definition, day trading sees a lot of volatility. And successful day traders are well aware of this. You optimise these constant changes to make a profit. However, if somebody does not have the stomach for constant change, they may not find much success in day trading.
Read more: What is a day trader?
Also, each day is different from the next. Monday may be a day that brings you Rs 2 lakh in profit. Tuesday may be a day of no profit and no loss. And Wednesday may see you lose Rs 1.25 lakh. You need to able to weather this unpredictability. If you let this affect you or make you scared in your decision making, you will do yourself no favours. So, here’s what you need:
1. Learn from your mistakes
Successful day traders are those who are able to accept losses and start afresh. You cannot hold on to your ego and try to recoup losses by chasing a losing trade. That’s gambling; that’s not trading. And you know what? As a strategy, it rarely brings success for gamblers too.
If you suffer a loss, take it on the chin and start afresh the next day. A fresh start means an ability to analyse, to figure where you went wrong, and to engage with changes in your strategy. You may suffer a losing streak. But you can’t let yourself quit. Change, recalibrate, regroup, and keep at it to pull yourself out of the funk. Look at other trades to find what went wrong and what could have gone right.
2. Treat it like the job it is
Day trading is not for fun. A lot of people think the volatility and unpredictability of day trading will provide them with an adrenaline rush and some extra cash on the side. But you need to take the trade seriously if you want to be successful. You need to do your research, build a foundation, work on strategies, and develop skills. You need to put in the hard work that day trading requires. It is a way to make or lose money. You cannot afford to be flippant with it.
Read more: Is intraday trading profitable?
3. Avoid unnecessary risk
Protect your capital. It is inevitable that even the most successful day traders will suffer some losses. But you need to minimise your risk. As a rule of thumb, your risk-to-reward ratio is 3:1 and you should not put in more than 2% of your trading capital behind a single trade. Other strategies like a setting a stop-loss order are useful measures of risk management.
Is Day Trading Right For You?
Before you enter into day trading, find out whether it is suitable for you.
- Can you afford to sit in front of your computer and monitor the market?
- Do you have the discipline to wait for the right trade signals instead of jumping the gun every time the market changes?
- Do you have the patience to wait for the timing to be right for trade?
- Are you adaptable enough to adjust to day-to-day and sometimes minute-to-minute changes in the market?
You will need to be mentally tough to weather the changes and absorb losses. You must balance independent decision-making with seeking help at the right juncture. You should be forward-thinking in order to foresee how the market may move. So, if these traits describe you, go ahead. Day trading is certainly a world waiting for you.
Read more: How to do intraday trading
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