Stocks & Commodities V. 30:1 (82, 80-81): At The Close by Alex Wasilewski

At The Close by Alex Wasilewski

Six Tips To Successful Daytrading

Daytrading’s not a profession for the weak, that’s for sure. Try these tips to help you trade.

It's a classic catch-22 in a recessionary job market: People looking to enter a new profession find they cannot get in without at least some relevant experience, yet they have little chance of gaining any experience because employers are eliminating or outsourcing entry-level positions. One notable exception to this is daytrading, which is the practice of buying and selling a stock within the same day. Anyone with a few thousand dollars in seed money can set up a short-term trading account and compete for profits alongside huge investment firms and seasoned, multimillionaire traders. The only credential you need is a positive account balance to make tomorrow’s first trade.

Daytrading is also inherently adversarial: The strong make a profit by taking money from the weak. Inexperienced traders can (and do) lose thousands of dollars in a matter of minutes as the stock market soars and dives. For every beginning daytrader who goes on to achieve long-term profitability, about nine others fail.

Although there are no shortcuts or sure-fire formulas for successful daytrading, some of the most common pitfalls can be avoided by following six basic tips designed to help traders develop more consistent and professional practices.

1. PREPARE YOUR MIND

What you believe about yourself is the most powerful predictor of what you can achieve in daytrading. A world-class athlete does not wait until he wins that first Olympic medal to start thinking and training like a champion. Likewise, great traders start to envision themselves as being successful before they ever make their first profitable trade of the day.