Daytrading is a very difficult endeavor for anyone who's
tried it. Those who go through it day after day will agree
that everyday is different and that each day requires
maximum attention. The end of each trading day leaves the
daytraders exhausted. But not only does it take stamina,
endurance, high degree of concentration and focus, there
are other factors that make a daytrader a special breed
apart from other types of traders. Every tick or second
counts. Precision and personal discipline makes the
difference between a loss and a profit. Not everyone is cut
out to be a successful trader. In fact, 95% of daytraders
fail eventually. But here are a summary of what NOT to do
that can help further enhance his chances of surviving the
daytrading jungle.
1.Do not discard or discount money management. This is the
single most important rule. Using sound money management
can lengthen the trading career. The longer his trading
longevity, the higher his chances of becoming successful.
Success requires experience and experience requires time.
Using money management is buying time to become profitable
in the long run.
2.Do not start trading without a trading plan or a
well-tested profitable strategy. A well-thought,
well-researched trading discipline helps maintain control
and focus to trader properly and not panic.
3.Ego is NOT money. Using ego to trade is tossing money the
window. Ego and money cannot co-existence in the markets.
Never have, never will.
4.Do not be distracted with news. News creates emotional
states: hysteria, euphoria, panic. These states of mind
will not help trading. News does move the market but
trading the markets is more profitable than trading the
news.
5.Do not be distracted by the surroundings. Absolute focus
is a must. Outside distractions and interruptions will
negate the trader from receiving the steady flow of market
information.
6.Do not count the money before the trade is closed. This
is a newbie mistake where money is the reason he becomes a
trader. Money is the least important factor in becoming
successful. Focus on the market and not the money, market
will reward accordingly.
7.Do not be tempted in entering trades that look too good
to be true. There are days when the markets seem so easy to
take money from the market. Those are the days that ego and
feeling of invincibility that will precede the next losing
streak.
8.Do not let the market dictate the mood. Gap ups and gap
downs and quick moves up or down can create a false sense
of who's in control and direction. Careful with these
sentiments because the opposite direction may just be
around the corner. Professionals wait for confirmation
before joining in the euphoria or panic.
9.Do not be bored or angry if there are no setups. There
are days when the biggest accounts dry up are those
trendless, low volume days. Watch for them and stay away
from them.
10.Do not think that today is the same as yesterday or any
other day. No day is alike. If he believes it is, then the
bias has been sucked into his mind, creating a setup for a
losing day.
11.Do not forget to use the stop loss orders immediately
upon entry. Stops are the life jackets to save the trader
from himself and the markets. Stops will help him stay safe
to trade another, the one that may take his equity higher.
No single trade should be a show stopper.
12.Do not think the market is an easy place to make money,
even when it does look like it. Take everyday as a new day
without remembering the previous days. Complacency is the
enemy of profitability down the road.
13.Do not follow opinions and calls in newsrooms, chat
rooms or forums without doing your own research. These are
biases that will lead to losses or worse, the trader paid
and learned nothing from them.
There are countless important rules but these are the most
pertinent in getting the trader started in thinking and
preparing for the world of daytrading. This type of trading
is probably one of the most difficult anyone has ever
tried, even more stressful than being a CEO of a big
corporation because personal defects and shortcomings will
be exposed immediately and the process of becoming
successful is a road full of self development and self
examination that will be painful. Finding self, a
successful strategy and physical and mental stamina will be
a long journey. But the reward carries an enormous
satisfaction when the objective is finally within reach.
----------------------------------------------------
Larry Swing is the President of the popular day and swing
trading site http://www.mrswing.com a place where you can
find free daily articles and videos covering education,
market analysis and picks from Larry and other well known
traders in the industry.
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