There is so much information about day trading out there. You can find countless articles and videos describing strategies, concepts, and terminology, all at your fingertips. However, these resources are only small pieces of a much bigger puzzle, and you need to envision the big picture before you know which parts to look for. We created this blog post to help aspiring traders anticipate the journey ahead.
The first step is to gather as much information as possible. Start with published books that can help you understand what trading is like and explore various trading styles such as swing trading, day trading, and scalping.
Additionally, there’s plenty of free material online; you just have to be selective with your sources. To help find useful information, we provide free informational resources on our blog and on the Cobra Trading YouTube channel.
Another way to learn about trading is to study the biographies of famous traders. A book that some reference is Market Wizards by Jack Schwager. These traders’ personal stories allow you to see what personality traits aid in successful trading.
Keep in mind this information is there to guide you rather than instruct you. There are many trading styles, and not all of them will align with who you are. That’s why it’s important to find the ones that work for you.
Focus Your Research
Now that you understand general concepts, narrow down and start focusing on specifics. Learn about price action, volume, and technical analysis. You may also want to familiarize yourself with the market history to gain a better grasp on stocks’ patterns. Research how stocks have been moving for the past 10-15 years and how current events affect various situations. You may want to accumulate this information before you begin trading in order to have a firm foundation before you hit the market.
And once you have the theoretical part down, it’s time to look into finding an edge. Again, start with free information that’s available online. Now that you know what to look for, you can seek out articles and Youtube videos that cover the information you want in-depth. You can compare the strategies of experienced traders and determine which ones may work for you depending on your personal strengths and weaknesses. Then, it’s time to adapt them to create your unique style.
Try Demo Trading
Once you learn theory, you may be tempted to jump into trading. But even the best plan in the world won’t make you a profitable trader if your execution is sloppy. That’s why some suggest trying out demo trading before using any real money. All Cobra Trading accounts have access to a free demo trading account to help hone in on their strategy without putting real capital into the market.
Execution is a skill of its own; it takes time to learn how to react to the market changes on the spot. At the same time, you will get used to various automation tools and fail-safe mechanisms such as the max loss rule. With this knowledge and experience, emotions may be less likely to influence your actions when real dollars are at stake.
Develop A Trading Strategy
With time, you’ll develop a list of criteria that will help you evaluate every potential trade. This helps you gain clarity and choose setups that will have the best probability of turning a profit. Each trade should have a clear entry, exit, and profit target. Having a straightforward plan before you enter a trade is what differentiates professional trading from reckless gambling.
Start Trading On The Right Foot
Once your system starts working and showing results, you’ll start building confidence. That’s when you might be ready to move to a live trading account and test your skills on the market.
Keep in mind, you may be surprised how easy it is to get emotional when real money is involved. At this point in your trading career, your goal is to learn how to be disciplined and focused in the live market environment.
This is a marathon, not a sprint. Take your time and build your process from the ground up. Customize it for yourself, and refine it as you gain more experience. This is how you find consistency in day trading — with small continuous improvement, diligent work, and discipline.
Scale With Confidence
And once you feel like you are going in the right direction, you may decide to increase the size of your account at a slow pace. It’s essential to do it steadily, without jumps that may introduce unnecessary risks. Utilize all available tools, such as stop-loss orders, to protect your account from accidents as you grow.
The process of learning never ends. The market constantly changes, and you’ll be facing challenges at each phase of your trading career. Overcoming these hurdles will grow your account and make you a better trader.
This is the general outline of what a professional trader’s journey may look like. If you’re feeling up to the task, you can open an account with Cobra Trading. And if you have any questions, our client success team will be happy to answer them.