It seems every day some new and upcoming superstar day trader (ok wannabe superstar day trader) asks me the same questions. It always strikes me as funny that everybody always seems to have the same questions when to me the answers just seem so obvious. I will admit I've been trading for a while now and I've seen and read all the doom and gloom numbers about how 90% of all day traders bust their accounts in the first year. Why? I mean seriously why does this keep happening over and over again? I think it boils down to a couple of really simple but important rules that too many new traders either don't learn soon enough in order to save some of their trading capital. Or they don't really understand the concepts. Let's look at a couple of the major ones that you have to understand and have mastered before you can really hope to earn a living at this day trading game.
Well, it's time to stop believing the lie. Stop paying for "sure thing" entry methods. I write a market newsletter each day, giving my "game plan" for the next trading day. I'm as specific as possible including Support and Resistance levels that I will be buying and selling against, which provides you with great trade set ups nearly everyday. I've been day trading futures for 27 years and I've developed a strategy that makes money consistently. I don't promise overnight success, anyone who is really serious about wanting to learn day trading realizes that it's not a get rich quick profession. Yes, my method does include great entries, but most losing traders have decent entry strategies. My experienced day trading advice doesn't focus as much on entries as it does on exits...Offense doesn't win this ballgame, defense does!
If you're going to make it day trading the stock market, and actually be successful at it, you must understand why this is, and then you'll program your reflexes to follow your knowledge. Think of it this way...large corporations spend millions of dollars inventing boatloads of products that are worthless. But in the early stages of research and development, the company can't tell which products will make money. If they take all their new products to market, and only a few sell, the few won't offset the losers, and the company will go under.
I know of a couple of traders that don't think twice about putting 40 or 50% of their account on the line every time they open a position. Well all it takes is two or three bad trades in a row and poof they are finished, account busted. Let's look at some numbers just for the same of argument. I like to trade the S&P Emini, each point has a value of $50.00 so if I set a stop for 2 points, trading 2 contracts I am willing to risk $200. Using my rule it would mean that I want at least $4,000 in that account to open that trade. I know that might sound like a lot, but trust me on this it's more than possible to have four or five bad trades in a row. Then what? Well then you dig out those want ads again.
"...companies place huge bets on losers all the time. What makes a system successful is its ability to recognize losers and kill them quickly." The same is true of stock trading strategies. Experienced professional traders place bets on losers all the time, but they know how to identify losers and kill them quickly before much (if any) money is lost.
And that brings me to the most satisfying aspect of trading for a living; money. On an average day trading the Nasdaq, it is not unusual to make more money in a couple of hours than I used to make in a whole month working full time as a wage-slave. There are bad days of course, days where things just don't work out, but they pale into insignificance over the course of a week or a month. It certainly took some intensive studying and a lot of practise before becoming a consistently profitable trader. But the end result of that hard work is an immensely valuable life skill that nobody can take away, and which allows for incredible freedom. Since I first started trading, the learning curve has become even easier for the aspiring day trader, with a multitude of new websites, training courses, and books all covering the subject. I envy anyone starting out in this business today - they certainly have many more learning aids available to them than I had at the same point in my own career.
Well, it's time to stop believing the lie. Stop paying for "sure thing" entry methods. I write a market newsletter each day, giving my "game plan" for the next trading day. I'm as specific as possible including Support and Resistance levels that I will be buying and selling against, which provides you with great trade set ups nearly everyday. I've been day trading futures for 27 years and I've developed a strategy that makes money consistently. I don't promise overnight success, anyone who is really serious about wanting to learn day trading realizes that it's not a get rich quick profession. Yes, my method does include great entries, but most losing traders have decent entry strategies. My experienced day trading advice doesn't focus as much on entries as it does on exits...Offense doesn't win this ballgame, defense does!
If you're going to make it day trading the stock market, and actually be successful at it, you must understand why this is, and then you'll program your reflexes to follow your knowledge. Think of it this way...large corporations spend millions of dollars inventing boatloads of products that are worthless. But in the early stages of research and development, the company can't tell which products will make money. If they take all their new products to market, and only a few sell, the few won't offset the losers, and the company will go under.
I know of a couple of traders that don't think twice about putting 40 or 50% of their account on the line every time they open a position. Well all it takes is two or three bad trades in a row and poof they are finished, account busted. Let's look at some numbers just for the same of argument. I like to trade the S&P Emini, each point has a value of $50.00 so if I set a stop for 2 points, trading 2 contracts I am willing to risk $200. Using my rule it would mean that I want at least $4,000 in that account to open that trade. I know that might sound like a lot, but trust me on this it's more than possible to have four or five bad trades in a row. Then what? Well then you dig out those want ads again.
"...companies place huge bets on losers all the time. What makes a system successful is its ability to recognize losers and kill them quickly." The same is true of stock trading strategies. Experienced professional traders place bets on losers all the time, but they know how to identify losers and kill them quickly before much (if any) money is lost.
And that brings me to the most satisfying aspect of trading for a living; money. On an average day trading the Nasdaq, it is not unusual to make more money in a couple of hours than I used to make in a whole month working full time as a wage-slave. There are bad days of course, days where things just don't work out, but they pale into insignificance over the course of a week or a month. It certainly took some intensive studying and a lot of practise before becoming a consistently profitable trader. But the end result of that hard work is an immensely valuable life skill that nobody can take away, and which allows for incredible freedom. Since I first started trading, the learning curve has become even easier for the aspiring day trader, with a multitude of new websites, training courses, and books all covering the subject. I envy anyone starting out in this business today - they certainly have many more learning aids available to them than I had at the same point in my own career.
About the Author:
Frank Miller has a Debt Consolidation Blog & Finance, these are some of the articles: Unsecured Advances - Find Things Getting Easier Now You have full permission to reprint this article provided this box is kept unchanged.
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