Making money as a day trader or swing trader requires discipline, patience, and a willingness to learn. After all, those that have become successful day traders did not happen overnight, without a little luck of course. There’s a lot you don’t know about the market that can inform how it moves, so it’s your job as a trader to be as fluent in the market as possible. Follow these quick tips for a solid foundation to your trading career.
Never Stop Learning
You will never reach a point in your trading career where you can sit back and kick up your feet, and the money will roll in. The market is an ever-changing beast that is constantly adapting to new technology and new techniques. You need to be as familiar with these trends as possible to capitalize on them. Keep your ear to the ground among trading communities and be prepared to evolve your trading strategy to adapt to the changing market.
Use Technology
Remember the scene at the beginning of The Wolf of Wall Street movie where Jordan Belfort starts out trading pink slips on the phone? Yeah, that’s pretty much a thing of the past for any serious investor. You need to embrace technology and the benefits it can bring you to have an edge in the market. Beginners should use platforms like Thinkorswim to help them backtest their theories and perform technical analysis on past data. The service lets you play with paper money for free, so it’s a good way to see if your trading theories are sound or not.
Entry & Exit Strategies
One common trap that even seasoned traders can fall into is not sticking to their strategy. While there’s no perfect entry and exit point for any stock, you should stick to your plan. Never second guess yourself in the heat of the moment, since you could end up paying for it later. If you’re determined to take your plays further than your current exit strategy, take your gains and only let a small percentage play the run.
Take Responsibility
Traders who lose their plays tend to blame the market instead of their strategy. That’s a good way to throw good money after bad. If you’ve tried a strategy that worked in the past but doesn’t seem to be working in current market conditions, it’s probably time to adapt your strategy. Take an honest stock of where you think the trades went wrong and then consider adjusting your strategy from there. If you can prevent the same loss from happening again, then you’ve become able to own up to your own mistakes.
Keep A Trade Journal
One of the most important tips any newbie can follow is keeping a trade journal. In the past, these were complicated ledgers but with software it’s easy to keep a journal of your trade activity. Most of it can be done automatically, but there are a few iOS and Android apps that are designed to give you a granular breakdown of your day or swing trades.