There are real day trading secrets out there. These secrets can help you increase profits without increasing risk.
If this sounds too good to be true, let me start with a story.
When I first started day trading, markets were hot. So hot in fact that there was an easy solution to almost any money losing situation.
You’d make it back. It was hard to be wrong with almost every market on a steady upwards tear.
With money being so easy-come-easy-go, I did not learn a single valuable lesson. That held true until the dot-com crash. It was an event that separated the skilled from the lucky.
Although I was not yet skilled, I was lucky. I guessed right that I would need to build up some skills if I was going to make a long-term living from trading.
Success didn’t happen overnight, but I never stopped trading. What was more import is that I never stopped learning and growing my skill set. It’s because of this that I am still trading over 20 years later.
The world of trading advice often peaks with “find something that works and then trade big.” I disagree. You don’t have to risk big to make it big.
Here are my 10 day trading secrets for increasing profits without increasing risk. I may not be able to go back in time to share these with my younger self, but it is gratifying that I get to share them with you.
Day Trading Secrets #1: Increase your trade frequency
Taking more trades per day will improve your trading. This is one of those day trading secrets that is counterintuitive.
It’s also a gem that helps in many ways. Increasing your trading frequency:
- Gives you more practice over a shorter stretch of time.
- Speeds up the discovery of whether your strategy works or not.
- Keeps you from becoming married to any one position.
- Creates a larger number of occurrences so that any existing edge has time to show more profits.
Day Trading Secrets #2: Carefully consider account commissions
You might think it’s a simple matter of “the lower the commissions the better”… but watch what you’re getting.
One of the most important day trading secrets is that there’s a factor other than price to consider.
That factor is speed.
“Trade execution speed matters.”
Day Trading Secrets #3: Pick the right strategy for you
Many traders spend their time searching for the Holy Grail strategy.
They imagine this strategy they seek will somehow be perfect. It will have the best edge, the highest win%, and the lowest risk of all. And they think all they need to do is find it.
Although it may be tempting to seek a Holy Grail strategy, this is the wrong approach.
I make a decent living trading. There are many high-frequency trading systems that would make more money for me. So why don’t I switch to them?
I’m a few supercomputers and a programming wizard or two short of making those higher profits a reality for me. Even more important though is that a high frequency strategy wouldn’t be right for me as a trader.
Even if a trading strategy looks like the best one on paper that doesn’t make it the right strategy for you.
So even though certain high frequency strategies might be able to increase my profits, I’m not going to use them. They aren’t the right fit for me.
I’m going to stick to my beloved technical analysis and money management techniques. These keep my account growing… with a strategy that works for me.
Every trader is an individual and should discover what works best for them. If a strategy works for you, don’t worry that it isn’t the best possible one available. Be happy that you know anther one of the important day trading secrets and have found the best strategy for you.
Day Trading Secrets #4: Consistently improve your trading skills
Life is long. Markets evolve and market edges appear and expire. Trends come and trends go.
There are many stories of traders who didn’t keep up with the times. Some had an edge and assumed it would last forever. For others, their strategy required them to be on the floor of a physical exchange. When computer-based trading took off, these traders were no longer needed.
“Always, always be learning in the markets.”
Even if you think you have the best trading strategy ever, always be looking to improve it. Many traders start early in life and can be in the business of trading for decades. Traders who rest on their laurels are in for hard times ahead.
You need to improve your trading game and you need to be consistent in doing so. It’s essential to your success and that’s why it’s #4 in the 10 day trading secrets.
Enjoy your trading profits while they are rolling in, but always be learning on the side. That way you will be able to change with the changing times.
Day Trading Secrets #5: Learn to love more than just the profits
Ask yourself an important question: why do I love the idea (or if you’re already a trader, the act) of trading?
If the answer is the profits, that’s not bad but it can be dangerous. Trading as a means to an end can drive you in the wrong direction in your trading career.
Think of it this way. If you care about the profits more than the act of trading, this can affect your judgement. You will choose methods, techniques and strategies based on profit potential alone.
This means you may choose to trade in a way that is not maximizing your enjoyment of your career. In the short term, this could work out. But over the long run, it is impossible to last long in this challenging career if you don’t enjoy it.
This is one of the most important day trading secrets of all. Learn to love not only the profits but the act of trading itself.
There are lots of things to love. A trader can love the challenge, the assumed lifestyle, the intrigue, and the image. You need to find what resonates with you and focus on that.
Day Trading Secrets #6: Learn to love your losses
There is no trader – famous or not – who has never taken a loss. It’s part of the game and it’s an important part. The ability to take losses separates the pros from the traders who are not likely to make it far.
More important than taking losses in your account is how you take the loss as a trader.
Do you get upset, and give up for the day? Do you sigh, clear your head and move on? Or do you get excited and think that’s one loss out of the way, now on to see if the next one is a winner?
“Good trading is more about how you take losses than how you take profits.”
This is the same as in sports. The best teams are not teams who never have a point scored against them. They do. The difference is when the other team scores they don’t let it get them down and move on to focus on winning the next one.
The healthy response to a well-planned trade that results in a loss is to say “NEXT”. This is why #6 of my day trading secrets is to accept losses and move on towards the next profit potential.
Day Trading Secrets #7: Focus on your personal finances
Day trading doesn’t offer a timely paycheck and it involves many ups and downs. Even those that have what mythical records have bad days, weeks, months and years.
How can you stay afloat for the long run when you may go for long periods of time without making good money?
The secret here is that managing your personal finances well is a must. When you have enough money saved on the side you will be safer. You will be able to hold your lifestyle afloat during periods of trading draw-downs.
Best of all, you will still be there to trade when things turn around and are going well again.
Manage your personal finances well enough to navigate the inevitable tough times. This is intelligent planning and is a must if you want to be a successful day trader. If you can master this, you’ve mastered one of the most overlooked and important day trading secrets of all.
Day Trading Secrets #8: Focus on your trading account size
You may have heard the general business saying that “it takes money to make money”. This is especially true in trading, but don’t lose hope if you don’t have a lot of money to start out.
No one is going to let you buy anything in the markets with no money down. Yet the amount of money required varies based on the market you choose and the amount of leverage you get.
You may chose to trade stocks, bonds, futures contracts, options, or Forex. There are also many different available brokers. These choices affect how much money you will need to start.
“It takes money to make money.”
Trading is an exciting way to build and grow money that you already have. One thing is certain. You need at least some money to start and it’s best if you have a comfortable amount that is 100% risk capital.
Save up enough money to start your account with a comfortable amount. You want to make sure you have enough that you never have to wonder whether you can make your next buy. You also want to ensure you never create a margin call situation.
Of all our day trading secrets, this one can be the hardest. It’s not easy to figure out how much you will need, or to save up this amount in risk capital. But getting this right will help you increase your profits and give you the best chance of success.
Day Trading Secrets #9: Learn now, risk later
The ease of the physical act and the low barriers to entry make starting out in trading easy. You only need to know how to click a mouse, and you don’t need a trading license to put your own money at risk.
This ease of starting is the cause of many dangerous situations. Traders jump into live markets without the required knowledge to navigate them. A trader can know nothing and get to the point of clicking to buy 100 shares of a $10 stock and risk $1,000.
A simple way to avoid falling into the trap of risking money too early in the game is to start simulated. Risk no money at all in the beginning by practicing without any money at all.
Make an account in one of the many trading simulators out there. Lots of them are even available for free. What this means is you don’t even have to put up money for the software to try out your trading ideas.
Practice a good strategy and see how it feels to win and lose in a simulated trading environment. Since you don’t have to put any of your money on the line you can try out anything you want.
If you are feeling rushed to get started with real money, start simulated anyway. I’ll guarantee you that the markets and opportunities will wait for your real money. I guarantee you’ll learn a lot about yourself as a trader.
This is important, and it’s why it’s #9 of my day trading secrets. Build up your competence first and risk real money second. You will increase profits without increasing risk.
Day Trading Secrets #10: Stick with your strategy and decisions
One of the most debilitating traps traders fall into is the lure of “the grass is greener”. At the first sign of challenge, they jump from strategy to strategy and from product to product. They never stop to focus enough time to get good in any one area.
This is #10 of the day trading secrets. Yet it’s so important that it could be in the #1 spot.
Traders who fail to pick a strategy and market and stick with them miss most of the secrets listed above. They jump strategy ship after the first few losses that they have to take.
If stocks failed to provide an overnight success, they move to Forex. If day trading strategies fell short of a money printing machine, they move to swing trading.
“Stay the course. Go deep, not wide.”
Trading is a process and it takes more time than most expect. Become a specialist. Focus in one area first, then after you have mastered one area you can move on to another.
Choose to stick with one strategy and market until you have become skilled. You won’t miss out on great strategies that need time to succeed.
For more day trading techniques, tools & strategies, check out these articles:
- 7 Unwritten Day Trading Rules To Follow
- Top 10 Tips For Day Trading Success
- 8 Common Mistakes To Avoid When Day Trading Forex
I wish I’d known these day trading secrets before I started trading. Increase your trading profits starting today without increasing risk.
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