I write about day trading rules and emotions a lot and maybe because this is the one question or area my students and those interested in my classes seem to inquire the most about. Can I actually make money trading? I do well on a demo account, but when I go live, I freeze up. I am always losing money, taking the losers. Why? How can you do it and not I?
The bottom line is that newbie traders, as well as, skilled traders lose money. The question is: Whats YOUR plan when you lose a trade and whats your plan when you win a trade?
For the newbies, you need to know the trading platform like the back of your hand first. This is the first essential step. Do not forego this step EVER.
Then, no matter what day trading system you are studying, you must establish a plan along with it, some ground rules. What do I do when a trade goes south? How much am I willing to lose for the day before I pack it up to return for a fresh start tomorrow? Conversely, what is my daily goal and once I reach it, no matter what my hunche or feelings of euphoria are, will I walk away and call it a day? How long am I willing to stay in a trade, how long am I willing to trade for the day, etc ¦
Ive said it before and I will say it again: You must know what to do when trading does NOT go your way. What is a good and tangible stopping point for you? Whether youve reached your daily goal or not. What you really need to master is the Plan B. What do you when things dont go your way. You can follow someone elses rules as a starter, but a trader needs to figure these parameters out for him/herself by actually going out in the trenches ie: LIVE day trading.
You cannot control the market by praying, keeping your fingers crossed and or with wishful, hopeful thinking. If youve taken 3 losing trades in a row, you need to know what your recovery plan is BEFORE you ever start trading.
With rules and a plan you know you will stick to without fail your emotions will have no part in your decision making process. More on this to come.
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Total Views: 444 | Approx word count : 422 | 06/24/2010