Daytrading Do's and Don'ts: Success and Failure in the Active Trading World
Do: create your own trading strategy. Keep fine-tuning. Draw from other sources but develop your own strategy.
Don't: blindly follow someone else. Subscribing to a newsletter or daytrading chat room doesn't mean that you can stop thinking for yourself.
Do: treat trading as a business. That means putting in long hours and investing in the proper tools that will help you to succeed
Don't: get into trading if you think that it is going to be "easy". It's not.
Do: use stop losses.
Don't: get married to a stock. Develop a plan and always cut your losses if you hit your stop loss. Failure to accept a loss is ruinous to your financial health.
Do: get into a regular routine.
Don't: daytrade sporadically and expect that you will be successful
Do: try to have a trading mentor.
Don't: think that you are too important to mentor someone else.
Do: Have at least six months worth of expenses outside of your trading capital
Don't: quit your job if you don't have at least this much saved up
Do: constantly scrutinize your trades and see if there is room for improvement
Don't: think that you have found the "Holy Grail" and can suddenly stop researching and working
Do: Get an accountant to do your taxes for you.
Do: Have more than one account just in case your primary account goes down for some reason.
Don't: download any suspicious files or open any attachments unless you are certain of what it is. Trojans can lurk everywhere
Do: Take vacations that don't include any work
Don't: Take a "working" vacation. If you are going on vacation, lighten or completely sell off your positions and enjoy yourself. Your brain will work much better when you come back.
Do: remain humble. The markets have chewed and spit out traders much smarter than you.
Don't: lack confidence. If you don't have confidence in your trading methods then you aren't yet ready to be a full-time trader
Do: ask for a sabbatical from your job instead of quitting completely if you are just starting out
Don't: try to trade at work. It will affect your performance at your job and your trading performance.
Do: Read, read, and read some more. Never stop learning.
Don't: think you know everything. You don't.
Do: Familiarize yourself with calling in an order over the phone, just in case.
Do: Have a secondary Internet connection, just in case.
Do: Figure out a nearby cafe that you could trade at, just in case your power goes out.
Don't: Get too down on yourself about losses, and don't get too high about your gains. No matter how good you are, you WILL have losing days and losing months.
Don't: try to trade too many stocks. Figure out the tendencies of certain stocks / certain situations and exploit those for profit.
Don't: ever stop believing in yourself.
Filed under: Motivational | Stock Market Education | Daytrading