2008-01-21 17:22:57
How to Become a Daytrader | Becoming a Daytrader
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Before I get into this article, let me dispel a couple of myths associated with daytrading.
"Daytrading is easy." If you think that daytrading is going to be a piece of cake and "easy money" then please, just take all of your savings and light it in a bonfire in your backyard. It will be much less painful for you. If you don't take daytrading seriously, then I can almost guarantee you will end up losing all of that money anyways; the only difference is, your pain will be drawn out for months and possibly years.
"90% of all daytraders fail." That might be true. But how many daytraders who give it a SERIOUS effort and treat it like a full-time job end up failing? The percentage of people who fail following these criteria will be much lower.
"Daytrading is like being on vacation 365 days a year." Again, if you treat daytrading like a real job, you will give yourself a much better chance of succeeding. If you treat it like a "vacation", you will be back at your old job before you know it.
The first thing I would tell you if you are serious about becoming a daytrader? Work hard. Most successful daytraders that I know are putting in at LEAST fifty hours a week. If they aren't trading, then they are researching and trying to find new plays. They are reviewing charts. They are listening to conference calls. Anything to give themselves an edge.
You expect to crawl out of bed halfway through the trading day, with no idea of what is going on, and bank a couple grand in profits? As if, think again.
The first step to becoming a daytrader is to take it seriously and treat it like a real job.
The second step? Prepare. Prepare financially, prepare mentally. Don't make the leap unless you have at least six months worth of expenses in a bank account AND a decent amount of trading capital (I would say at least 50k.) I have heard of people with 10k in capital and no other money saved up trying to make it as a full-time daytrader. Uh, no. You need to prepare yourself mentally for the grind as well. You need to ask yourself if you will be able to withstand losses that might stretch on for weeks. I would recommend hanging on to your job and possibly scaling back your days that you work if possible, and then you can try trading on your days off. You will get an idea as to whether or not you can handle the grind without having to necessarily quit your job.
Next, when you are ready to make the leap, arm yourself with the best tools. Do your research and find a broker that will give you all of the tools that you need with reasonable commissions and quick executions. Invest in a newsfeed. Invest in a proper quotes package. Invest in a proper charting package if that is your thing. Daytrading is a business and you need to invest properly in your business.
Next, when you have begun trading: be critical of yourself. Analyze and re-analyze your trades and why you made them. Do your profit / loss numbers each month. What's working? What isn't working? Do you need to change your plan?
Lastly, never stop working. Never stop researching. Don't get over-confidence; the stock market is littered with the corpses of those who got over-confident. The second you stop researching and figure that you have everything figured out is the second that you lose your edge and become a pylon.
Daytrading is hard work. If you are willing to put in the work, then by all means, give it a shot. If you figure that it will be a vacation, then good luck. Just don't quit your day job.
Filed under: Motivational | Stock Market Education | General Knowledge
COMMENTS
Comment by John McLaughlin on October 24, 2008 @ 10:03 pm
Great advice and well written.
Allow me to add a few comments:
Day trading is not for loners. You need an advisor (otherwise know as a consultant for strategy, a coach to gain competence, and a mentor to keep you in the game to achieve your goals.
With that said, here are a few things you need to become a Winner day trader:
1. A System - a winner's system/game
2. A Coach - an actively trading Consultant / Coach / Mentor
3. A Trading Room – learn to trade with winners, including your coach
4. Lots of Practice with your Coach - to gain confidence, competence, and results (winning)
Good Luck with your trading:
John McLaughlin, Stock Trading - Consultant / Coach / Mentor
www.DayTradersWin.com
www.DayTradersCoach.com
949-218-4114
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