There are many day traders out there; some find consistency and profitability, while others can’t seem to succeed. Both groups are putting time and work into learning about day trading, so why do they get such different results? Let’s talk about what separates successful day traders from those who aren’t successful.
There are many ways to trade, and there are several specializations to choose from.
Whether they choose swing trading, day trading, or scalping, successful traders become experts in their niche. As a result, they do what works best for them and hone their skills over time.
You could learn a little bit of everything, but the goal is to become a specialist in one particular area. You can always learn other techniques after you have mastered one successfully.
It’s great to try different things at the beginning of your day trading journey to see what your preferences are, but choosing a niche is highly recommended for advanced traders looking for higher levels of success.
You can’t control much in day trading; there is no way of knowing how the market will behave, or how your trades will be affected. You can, however, control your routine.
Consider how you start your mornings. What do you do when you get up? When do you start checking your scanners? Learning your personal schedule and considering each action is essential for developing a disciplined routine for day trading.
For every step you take, you need to have a well-defined analysis, trade execution, and risk management process. With time, you will be able to estimate the market at a glance and see if there are any setups worth your attention. Experienced traders learn that knowing when not to trade is just as important as recognizing opportunity.
And once you have your routines in place, you are ready to take on any challenge that day trading throws at you. You can’t control the market, but you can control how you respond to it.
Being able to do quality research goes a long way as a day trader. You’ll need to make important decisions about your broker, software, stock information websites, and utilize the news to encourage successful trading.
You’ll find out how you prefer to receive this information as you go about locating it. For example, do you prefer candlestick or line charts? What timeframe is best for you, your schedule, and your style? All these questions need to be answered before you jump into trades.
Think about these questions when the market is closed so that you have your answers ready when opportunities present themselves in the open market.
Every successful trader has a set of rules that they follow. In fact, many traders have somewhat similar rules that they learn from peers and mentors. The trick, however, is to develop the rules that apply to you and your specific situation.
For example, if you know that you tend to do revenge trading, create rules that will prevent you from doing so. Likewise, if you are known to blow up your account during Black Swan events, the smart action to take would be to create hard limits on losses and set up stop-loss automation that will have your back if the trade goes against you.
This is why the best trading wisdom comes from your own experience and research. You can try to follow other traders’ rules, but they might be useless or even harmful for your unique trading style. Instead, track your executions and analyze your style to create the rules that will propel you to success.
Be ready to adapt
Another key difference between successful and unsuccessful traders ist the previous recognize changes in the market and respond by adapting their strategy accordingly. The stock market goes through cycles, and successful traders are able to identify them.
This is why being flexible is so important. For example, if your rules and strategies were developed during a different market phase, they might need to be updated to withstand the current climate. Look at the big picture and consider what techniques need to be reconsidered before jumping back in.
It takes a long time to find success in day trading. There are a lot of things to explore and learn, and nobody has become consistently profitable overnight.
These are the key concepts that separate successful traders from unsuccessful traders. As you gain more experience, try applying some of these points in your day-to-day trading and see how far they can take you.