Most Common Fears Day Traders Experience
Even seasoned investors with long-term goals experience some qualms when making critical financial decisions. Day trading introduces the added intrigue of making buy and sell decisions quickly to benefit from a number of small gains more often than realizing a windfall profit from a single trade. There is, of course, always that thought in your day trader mind set where your analysis and decisions will award you with a quick hit that makes a significant jump in your account balance.
Underlying a day trader’s decision to take up the fast-paced, adrenaline-pumping action are several fears common to the activity:
Fear # 1 – Risk
Many would-be traders hesitate to jump into this form of investing strictly due to the inherent risk of financial loss. To be sure day trading exposes you to a very quick realization of errors resulting in losses. This is not funny money – it’s your livelihood and financial future. Basic survival instincts kick in that prevent some traders from making decisions in real time that could provide the gains they seek.
Reality – All investing involves some risk, especially during such periods of market volatility as we’ve experienced in the past year. Just ask the investor with his “safe” 401-K or IRA whether there has been any impact to those account balances. Using reliable information sources coupled with analytical tools and a reliable online broker who handles your trade orders in a timely manner greatly reduces risk and provides an advantage for your trading sessions.
Fear # 2 – Thinking It’s Easy – Finding Out It’s Not
How hard can it be? You watch for a stock or commodity you’re familiar with, wait for it to trend low, pounce when the time is right, then sell high. Sounds like an intuitive past-time that anyone could make a killing participating in.
Reality – In truth day trading requires a complex set of skills that includes studying market trends, indexes, current events, and even geopolitical conditions. An economy around the world can change the value of your holdings very quickly. Knowing the signals that drive smart decisions takes time to develop – resist underestimating the need for educating yourself to the skills and techniques of day trading before making that first trade, and start slowly as you learn what works – and what does not – for your particular strategy. Don’t become over-confident too quickly either. Success in another occupation or adventure does not mean you’re an instant expert on day trading.
Fear # 3 – Lack of a Trading Plan
With the broad terminology and variety of investment offerings traders can easily be intimidated by the thought of entering into trading action. Along with the potential for financial loss there may be psychological or emotional considerations that make you averse to moving forward due to the unknowns of formulating a trading plan.
Reality – There are many internet sites that provide a great deal of information regarding day trading techniques and strategies. You may want to focus on one market segment for initial trades and expand to other financial vehicles as you gain experience. Another option is to read a book or two to gain from others’ experience.
Fear # 4 – Complexity
Day trading truly can be a complex and intimidating activity. Market volatility introduces even more variables that challenge even professional day traders. How is a new investor to understand all the appropriate indexes, charts, and other influences that can shape decisions? Add to that the terminology and tactics such as stop loss, futures, options, calls, and so much more, and it can be enough to scare off any prospective trader.
Reality – There’s no reason to feel you need to understand every trade option or term before moving into the world of day trading. You can start simple and work your way into more complex trades and trade options as you get a better understanding of the vehicles available to you.
Putting Your Day Trading Fears to Rest
Utilizing an online broker that provides you with superior service and support can go a long way toward allaying your fears and rewarding you with trade profits.
SureTrader is a leading online broker with tools and news sources for accurate analysis and lightning-fast trade execution. SureTrader provides unmatched friendly and courteous support available to our clients on a 24×7 basis to answer any questions and resolve problems.
SureTrader’s desktop and mobile applications ensure timely and flexible access to SureTrader services – iOS and Android platforms are each supported. Global access to services enables quick and easy trades even in after-hours trading.
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Disclaimer: SureTrader Blog is not intended for U.S. persons. Stock information is not to be viewed as buy or sell recommendations.