Day trading for beginners is a challenge.
Did you know that the average failure rate among beginning day traders is as high as 95%? With that grim statistic you might feel like your career choice is doomed from the start.
However, the reality is that many day traders simply don’t start out with the right information. They jump in, try a few things they’ve read about online, and when it doesn’t work out right away they head for the hills saying “day trading just doesn’t work”.
I want to help you be one of the 5% of day traders who succeed in this career long term. In this article you’ll discover seven steps you can take as a beginning day trader to shortcut your path to success and skip past some of the common mistakes that cause many new day traders to fail before they’ve even gotten started.
Day Trading For Beginners: Shortcut #1: Beware Of Shiny Object Syndrome
Jumping from market to market and method to method is tempting for many traders who are just starting out. The temptation is just too great. They start with just one, but soon find themselves pulled in every direction.
First stocks look like a good choice, but then you try Forex, and how about futures, and then options. Not to mention the multitude of instrument choices within each of these markets. Should you trade Apple ($AAPL) or Facebook ($FB) stock? And what about Gopro ($GPRO)?
This is shiny object syndrome and it can be deadly to your success. The more you jump around, the more you spread your focus and the less able you are to master any one skill.
A great way to avoid shiny object syndrome is to start small by trading just one market, and then only branch out once you’ve mastered it. For example, you could set the rule that until you are confident in your skill, you will only trade the emini futures contract.
Day Trading For Beginners: Shortcut #2: Stay Simulated As You Practice
One of the biggest mistakes beginners make is switching from simulated to live trading too soon. They make a few good trades and start to wish these had been real profits, so they open up a real account and put their money at risk.
However, rushing into live trading before you are ready can kill your chances of long term success. When you lose real money up front before you are ready it can be a blow that is hard to come back from, both financially and psychologically.
What you need to do is be patient and practice your trading in a simulated account until you are truly ready to go live. This keeps you safe and ensures that you have zero risk while you learn.
Day Trading For Beginners: Shortcut #3: Invest In Your Education
Even if you can get by with just the information you find for free online or you manage to learn simply by trail and error, there’s no escaping the fact that every trader can benefit from education. The problem is that it can be more tempting to spend money on software and tools than on improving our knowledge.
When you find yourself balking at spending money on your trading education, remind yourself that for every dollar you spend you are likely saving countless hours of effort in trying to re-invent the wheel all by yourself.
You expect to invest in your education to become an engineer or an electrician. Serious traders treat their career just like any other, and set aside a budget for their education.
Day Trading For Beginners: Shortcut #4: Study Your Psychology By Journaling
Trading is a psychological game as much as it is a game of skill. To master one without the other is a recipe for failure.
But how exactly do you become good at the psychological side of trading? Many articles are written on how important trading psychology is. However, there is much less information on how to actually improve it.
One of the main reasons for this is because it is such an individual consideration. Everyone reacts differently to the emotional highs and lows of trading. We are all a study of one.
A simple and personalized solution is to journal about your experiences in the market. Write down how you feel during winning trades, loosing trades, days where you profit and days where you loose. You will start to find patterns in your own psychology, and this can give you keys as to where you need to improve and in what situations your strengths and weaknesses come to the surface.
Day Trading For Beginners: Shortcut #5: Ignore The Nay-Sayers
Day trading is a notorious career, filled with stories of incredible rags-to-riches successes and an almost equal amount epic failures. With all of this controversy, it can make people have a knee-jerk negative reaction when you tell them you want to be a day trader.
Avoid the topic of trading with people who don’t add to your success. Seek out those who are genuinely interested in trading and you will insulate yourself from the negativity. While you want to listen to good advice and warnings, remember that you are free to change the subject if what you’re hearing is not constructive to your trading career.
Day Trading For Beginners: Shortcut #6: Seek Out Like-Minded Traders
Day trading is one of those careers that can get a bit lonely. It is often just you and your trading screens, day after day, and week after week. Silence is there to greet you each time you shut your trading screens down for the day.
A simple solution is to get involved in online trading groups. This is a great way to meet like-minded traders and possibly even mentors. There is nothing like getting to share your victories and struggles with other people who are in the same situation as you are. It can make the difference between feeling isolated, and feeling like you are surrounded by a community of friends.
Day Trading For Beginners: Shortcut #7: Give It Time
These days, everyone is in a rush to do everything. More, better, and faster have become the mantras of the modern world. This is fine when you’re simply talking about receiving an Amazon order the next day, but when you’re dealing with a career, learning the necessary skills and absorbing the important lessons that will fuel your success should not be rushed.
“Rome wasn’t built in a day.”
Just remember that age old cliche whenever you start to feel the pressure to go faster. This is a career, not an online purchase. You can’t rush true skill. You wouldn’t expect to be a doctor in a year and you shouldn’t expect to be an expert trader in a year, either. Give yourself a generous period of time to study and practice trading. If you take time to acquire your skill, you will reap the benefits later.
Do you agree with the seven ways to shortcut success covered in this list? Join the discussion and let use know what you think in the comments below.