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