Common Mistakes in Day Trading?
Day trading needs you to be careful in order for you make the highest possible income from it. The pressure that day trading creates makes it easy to make a costly mistake, so you need to be confident about your trades to make sure that the majority of your day trades are successful for you.
1. Not having a plan
It’s really tempting to just dive in there and make a trade. After all, you want to prove to yourself that the system works for you and that you’ll come out of the day at a profit. Without a plan, it’s much less likely that this will happen. Think about it: if you went on a long drive without deciding on a destination, you could end up anywhere. The same applies to stock trading. You need a destination, a plan. Set aside some time to work on your plan, it’s time well spent and you’ll be rewarded for it.
2. Not managing your cash
Some people seem to be able to instinctively handle money well. Others spend it as soon as it reaches their wallet (or maybe before). You’ll know what your pattern is. But whatever you normally do with your money, you simply must learn how to manage your cash. If cash management isn’t your forte, pick up a book at Amazon and start practicing managing your regular money before you begin day trading. Or put on a different “hat” when you’re trading and be fanatical about how you look after the pot of money you’ve set aside for your stock trading.
3. Borrowing money in order to trade
If you went to your bank manager and asked them for a loan against your house, they ‘d likely say “yes”. The same bank manager would almost certainly refuse if you asked to borrow money to play the stock market. Apply the same rule to your own cash management. Don’t max out your credit cards or take out extra loans to finance your trading. If you haven’t got any cash to spare for your trading, take a step back and decide whether or not this is an area you should be getting involved in. The golden rule is that stock prices can go down as well as up, so you should never be investing more than you can afford to lose.
If your patience levels are tested in ordinary, day to day, life then you’re likely to struggle with day trading. Share prices leap all over the place, all the time. Selling too soon – or too late – can be a costly mistake. Selling at the wrong moment without taking a few seconds to think can be expensive for you. If you’re normal temperament is to be impatient and rush into things, investigate different relaxation techniques to help you in your regular life as well as your “trading” life.
5. Always looking for the next system
Sure, the grass is always greener on the other side. It’s human nature to think that. The same applies to day trading systems. Surely the next one will be the one that turns you round and makes money? OK, if you’ve tried a system for a decent amount of time and it’s showing a permanent loss then it’s time to move on. But if you only started it yesterday, then there’s a good chance you haven’t really given it a proper try. Which goes back to the patience issue really. Focus. Concentrate. Become your own expert rather than searching for the pot of gold at the end of the rainbow. You may also go to this site.