The Truth About Day Traders
Day traders of course share one significant common goal: making money. But there’s much more behind the decision to venture into the realm of day trading and fast-paced investing. There is a definite psychology inherent in day trading regardless of the strategy any particular trader may develop.
Many traders and critical outsiders liken day trading to patronizing a casino. In reality there are some valid comparisons: each involves putting up a certain amount of capital with the plan or hope for turning a profit – maybe even hitting the ‘big one’. Each also involves a certain level of risk and potential for loss. Gamblers fully understand the risk and accept that only a certain percentage of players will walk away with a profit from a gaming session. Statistically most day traders will lose money as well. It’s a matter of preparation, observation, and understanding of how to ‘play’ that makes the difference.
What do Successful Day Traders Have in Common?
There a number of attributes which make leading traders stand out from the others to make them profitable over a period of time:
- Knowing when you have made a wrong choice so that you can minimize losses when they come – and they will come. Even the most experienced and successful investors will make the wrong call from time to time.
- Avoid taking mistakes to heart. Note what drove you to make that decision to develop keener insight and selection criteria for your next trade.
- Maintain confidence – day traders practice discipline and strategic judgement that supports their trade decisions. Developing this strategy and living by it gives profitable traders the ‘edge’ they need to make smart investment decisions without over-thinking each trade order.
- Master techniques – learn to read and understand tools such as market indexes, charting tools, and even financial news. Every source of information leverages knowledge to your advantage in day trading.
What Causes Day Trader Failure?
As with positive attributes there negatives that plague some day traders and contribute to losses and even total abandonment of day trading activities:
- Inability to cope with stress – stress is inherent with day trading both from the potential for gains and the even more stressful potential for financial loss. Those who cannot manage stress levels are likely to make bad decisions including panic sell-offs that make minor losses more severe.
- Lack of understanding the market – as with any endeavor success includes knowing your business. Traders who don’t do their homework before proceeding with buy and sell orders are at a disadvantage over those who monitor trends and news that impacts market prices.
- Failure to recognize limits and set rules – without pacing trading activities against available capital a trader can be out of business quickly. Setting limits for each trade can ensure longevity and reduce risk.
What Can Day Traders Do to Improve Chances for Profitability?
Education is as important to day trading success as it is for many other occupations. Learn to read charts, understand economic news that may signal opportunities for profits, and track indexes that pertain to your strategic plan.
Develop a strategic plan. Know markets that you want to participate in: stocks, currencies, commodities, futures, options. Learn as much as possible about your focus of investments.
Select an online broker that can accommodate your approach to investing. Day trading requires real-time access to information and quick action when the time is right to buy or sell. Support of your trading activity is also important, especially for beginning traders. Technical problems with executing trades can mean missed opportunities and even losses.
SureTrader is a leading online broker with tools and news sources for accurate analysis and lightning-fast trade execution. SureTrader provides 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.
Contact SureTrader right away to get started doing online trading with the best in online brokers.
Disclaimer: SureTrader Blog is not intended for U.S. persons. Stock information is not to be viewed as buy or sell recommendations.