Want to Day Trade? How to Avoid Day Trading Mistakes

By | November 23, 2012

When an amateur financial market participants are made reference to word Day Trading eyes glistens with dreams of  making millions in quick time.

So  does Really Day trading is so simple. As you have to keep sitting in front of your screen buying and selling stocks and make huge profits. So How much do day traders make. As per my experience in trading it takes almost 3-4 years for a serious trader to breakeven and after that sky is the limit. But 90% of traders gets wiped during 1-2 years and remaining in next 2 years.

Lets discuss the  most common trading error while day trading stocks.

1. Trading without a Day Trading Plan

Most of Day traders never create a trading plan.Too many rookie day traders enter the market without  having a  Plan. They fail to understand that they are competing against Hedge funds , Mutual Funds  and High Frequency trading platforms like online forex trading system who are there to suck money out of them. Day trader should have  entry price for buying a particular stock, your exit price and stop loss to protect from unwarranted losses.

 

2. Over leveraged Trading

If there is anything that can destroy a day trading ira account or online brokerage accounts is , it’s margin.Margin Trading if used properly, margin is a valuable tool that can boost profits and using a small amount of capital, But when margin leverage goes against a trader can wipe of  day trading ira account with 2-3% move against the trader.In the past, many people misused margin, borrowed money from the brokerage than they could not afford lead to eventual wiping off account. It’s best to day trade with money you can afford to loose.

 

 

 

 

3. Chasing Trades

Now FDI in Retail is talk of the town and most of traders are chasing Pantaloon Retail. Stock is making wild moves and this could lead to an unprofitable trade. So never chase a stock as if its your last trade. If you miss a stock on the way up or down, let it go. There will be other trading opportunities.

 

 

4. Not Understanding Market and Limit Orders(sell order limit or market limit stop orders)

By Definition of limit order  you can establish your maximum or minimum price for trading a security. You can set a buy order and Sell order with sell order limit. In Market orders you decide market control your order.Day traders should user Limit orders more to get into right price.
 

5. Following Day Trading Tips

At least once, nearly every trader gets fooled into buying stocks based on tips from persuasive sources. Even when the tipsters are right, they aren’t there to tell you when to sell. It takes a lot of self-control to keep your ears closed, but successful day traders rely on their own judgment — not on what others are saying.

 

 

6. Refusing to Cut Losses

It’s human nature to hope that a losing stock turns around. But if you’re a day trader, refusing to cut losses can damage your account. When a stock is headed south, be disciplined enough to prevent a small loss from turning into a much bigger one.

 

 

7. Trading Too Early or Too Late in the Day

The first and last 15 to 20 minutes of the trading day are usually chaotic, as market orders are filled from anxious investors rushing to make moves near the opening or closing bell. You also are competing with institutional and high-frequency traders. “The first and last 15 minutes are too volatile for new traders.

 

 

8. Letting Your Emotions Rule

What does it take to become a better trader? Discipline. “You need to develop a set of strict rules that takes the emotion out of a trade.Read this Article for Emotional Trading

 

 

9. Having Unrealistic Expectations

Some rookie day traders keep looking for something magical that will bring them easy profits. A few have already calculated how much money they plan to make in the market. Unfortunately, the market has other ideas. “Don’t seek a silver bullet,” Wagner says, “because there isn’t one. Some people will jump around looking for different instruments and strategies without taking an honest assessment of themselves. There is no easy way to play the market.” He says traders need a strategy, rules and discipline to become profitable.

 

 

10. Going Into day Trading Uneducated

Uninformed day traders think that anyone can make money day trading. But to be successful at it, you’ll need training. “If you were laying on the operating table, waiting for your surgeon to take out your appendix, you wouldn’t want that surgeon to walk in reading a pamphlet, ‘How to Remove an Appendix in 10 Easy Lessons,'” Turner says. She says to be a consistently winning trader, you should start with paper trades, and then study hard so you understand how the market works. “Learning to day trade successfully can take as long as going through college and obtaining a degree,” she says. We Do offer Trading Course (Click on Link to know more)

 

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