Every trader will have their own personalized trading style, niche investment area and set of rules or guidelines. However, there are a few key day trading tips that every great trader knows and follows religiously. Despite all the potential variation among traders, there are a few aspects to trading that are absolutely essential to success.
Once you have internalized these top 5 tips from the world’s greatest traders, you will be in a much better position to succeed as a day trader.
Develop And Backtest A Personalized Strategy
The investment world is so massive and complex that the only way to get ahead is to find a small niche and become an absolute master at trading it. All the greatest traders started off by identifying a niche market that was relevant to their skills, knowledge, interests and experience, and then put in the time and effort to develop, backtest and hone a consistently winning strategy.
Just like a sports star, you will become so good at what you do that it will seem effortless to outsiders, while in reality it represents a lifetime of dedication to the perfection of your craft.
Develop Monk-Like Discipline
Developing a winning trading strategy is only the beginning of the road to successful trading, now you need to follow it. This means regimenting your trading so that you are consistently employing your trading strategy.
Sometimes the market will simply refuse to go along, while other times you will simply be tired, frustrated or angry. There will be a constant temptation to depart from your trading strategy, increase your leverage to cover a loss, break a small rule because you are sure that you are right…the list goes on and on. Successful traders develop a monk-like discipline that provides them with a laser focus aimed at consistently producing a reliable level of profit.
Much of the skill of trading is the highly-developed sense of self-awareness that allows all the greatest traders to ignore the distractions and temptations, and become true masters of their craft.
Ignore the Holy Grail Trades
The best traders know that smart trading is not gambling. Yes there is risk involved, but smart trading is about knowing when the potential gain justifies the risk. It is always tempting to chase holy grail trades that will produce eye-watering returns in a short amount of time, but being able to ignore that temptation is what separates the great traders from the rest. Even in the best trading chat rooms you will find that pro traders take losses. It’s inevitable and something you have to learn to deal with.
Great traders consistently take base hits to a make a living while every once in a while a huge trade will come along.
Keep it Simple
The investing world is full of complex instruments and theories that are meant to beat the system by offering some magic formula that ignores the inherent balance between risk and return. Unfortunately no such formula exists, and those that are successful for a time always end up imploding catastrophically in the end.
Successful trading is about identifying an area in the market where you can become a master, and then consistently performing well in that market day after day. You might be dealing with complex ideas and instruments, but the basic principles that you will be applying to guide your trades will be the same simple rules that all other great traders follow.
If your trading strategy is too complex and unnecessarily sophisticated, you will find it impossible to apply to the vagaries and uncertainty that rule the markets on a real-time and day-to-day basis.
Learn To Accept Losses
You will be wrong and you will lose money. Occasionally you will be very wrong and lose a lot of money. It happens, no matter how well your prepare.
The truly great traders accept that they operate in a world of uncertainty, and that it is inevitable that they will sometimes be wrong. The key is to not let this affect your attitude or judgment, and to develop ways of coping with loss just as calmly as you acknowledge your wins.
The greatest traders coolly and calmly make their trades day after day, and make the necessary adjustments to their trading strategy as they get real-time feedback from the market. None of it is personal; it is always business. Learn to keep your cool no matter what, and you will be ready to compete with the greatest traders in the world.
Becoming a consistently profitable trader is no easy task and is why it is imperative you make the best of your time by getting educated and developing/backtesting a strategy that has edge. Once you have the data proving that your strategy is profitable then all you have to do is stick to the plan no matter what!