The approach and strategy are not the same for all day traders because their expectations and perspectives are different. Some of them are interested in free trading while some are concerned about the tax imposed on the earnings from day trading. But to become successful in the long term, every day trader should possess some common qualities.
You will get a clear idea of 7 such indispensable qualities in this article. If you have plans to enter day trading, then you have come to the right place. No matter whether you are a newbie or a pro, if you can build these qualities, you will be able to reach a greater height, that’s for sure.
Open Zero Brokerage Demat Account
Some reputed brokers are offering this service free of cost to stay ahead in this competitive market. It is necessary to have a zero brokerage account.
Always have the urge to learn new skills. ‘Technical Analysis’ is vital to get a better insight into day trading. To acquire expertise in any subject, you have to study and learn. Studying does not always mean only books, lectures, and videos.
Another impactful way to master is through a practical approach. There are different techniques involved in day trading. You have to dedicate a considerable amount of time and effort to learn ‘technical analysis’ properly.
Now, you must be curious to know what technical analysis is. This is a technique of predicting the future price movements of stocks analyzing the movements of the past.
The more you learn various technical analysis techniques, the more accurate you will become at anticipating future stock prices. You will be able to guess what is going to happen in the market.
It’s not possible to pinpoint the value (price) accurately, but getting closer indicates that you are on the right track.
The majority of the investors use ‘technical analysis’ of various charts showing the prices over a range of past periods. For day trading, use a 5 minute or 10-minute chart.
Follow The Legends
In any domain, some pioneers showed us the path to follow if we wish to hit the target. Follow these masterminds if you want to become a pro in that field. Read about their lives, their works to acquire more and more knowledge. This will help to understand the subject better and to experiment with your understanding. Such experiments and continuous learning process will let you excel.
Use Virtual Platforms for Implementing New Strategies
Before trading with new strategies or experimenting with a new method, try it on paper trading. See if you can successfully apply it to real money to obtain profits. The virtual trading platforms are free to access. Alpaca is one such popular tech company that helps people in asset management. They also offer free stock trading. Examine your strategies several times to gain confidence before joining a real and complicated share market.
The stock market resembles the battlefield. If you are making money here, there must be someone who is losing it. From that point of view, you can call it a one to one battle.
A Day Trading Routine Is Needed to Avoid Several Mistakes
Thousands of day traders make some common mistakes. If you create a trading routine, you can gradually reduce those mistakes. Start trading at a certain time every day.
Check the economic data releases or company announcements that may influence the market, and also stop trading at a fixed time. After the trading gets over, allocate some time to review each trade you did that day and go through what you did right and what you did wrong.
Also, maintain a routine for weekly and monthly reviews. Based on your trading performance, make some changes to your strategy if needed. Make it a point that your trading is aligned with your plan.
Compare with the previous weeks and months to understand where you are doing well and where you are lacking. A disciplined approach will help you to grow bigger.
Very few traders find profits immediately. Until you get into the plan for short-term gain, try various tricks and strategies. Your willingness to stick to the right move and discard the wrong one will help you to thrive as a seasoned day trader.
If your plan repeatedly fails and still you stick onto it, it is an act of stupidity. After some days you will have no money left with you.
Create a Checklist
You can have either a mental or a physical checklist. But in this case, I’ll recommend a physical one as you can study it anytime in the future. Only a pen and paper, that’s what you need to create the checklist. Note down the stock names that you are monitoring on that particular day.
When you see the price chart, you will be more likely to get distracted and trade without following the plan you made. For this reason, you require the checklist to run through it prior to each trade.
You have to ensure that all your trades meet the specifications, as well as the laws that you set in your trading strategy. Since you have created the plan on your own, it will take a few minutes to go through it. The checklist will protect you from bad trading.
Utilize Your ‘Stop-Loss’ Order
The stock market doesn’t force you for any trade. You are free to choose the stock. Recognize your limit. Before putting your capital on the stock, be clear to yourself how much loss you can afford. You will understand when and where to stop.
You should choose the stocks carefully, review the past price chart, the consequences of your profits and losses. Once you set your limit, the downside will be minimized, and you will win most of the time.
Most of the traders, when they lose, accuse the unfavourable market condition, which is non-sense. The market never forces you. Learn to take responsibility for your mistakes. Analyze what went wrong so that you will not do it again.