Anybody who wants to learn day trading needs to follow certain beliefs. I will not say rules because a large amount of folk don’t like the word, but principles. A number of them are quite well known and some of them are less so, but they’re all crucial to the successful stock trader. I call them the 4 major principles of day trading.
1. The Buck Stops With You
Whether or not you are looking about for a day trading methodology or developing your own, remember that whatever you do is your responsibility. Ask for advice and help by all means, but do not believe everything you hear. People are different and their trading styles can alter hugely, so never follow advice blindly.
Equally, you can buy in a system but do not neglect to test it. Even if the guy who designed it is saying that it will double your money in two months for certain sure, you must test, because there are 3 possible issues with that. One, he could be lying. 2, perhaps it used to work but it does not work any more. Three, perhaps it works for him except for some unusual reason to do with your spread or whatever, it does not work for you. Your cash is your responsibility and yours alone, so put the system to work on a demo account until you are sure.
2. Stay Calm
The most important enemy of any trader is his or her own feelings and this is especially true for the individual that wants to learn day trading. If you’re the kind of person who makes bad calls under stress, you might want to think again about choosing day trading as your method. This is a fast moving world where seconds can count in thousands of dollars, so you want to keep a very cool head.
Now pretty much everybody likes to think they seem to be a calm sort of person who would react well under pressure, so even if you are convinced you are going to be the world’s number one ice cold trader, test yourself as well as your system in that demo account. If you curve off the system even once or start altering your position size, closing out early, waiting too long etc in demo mode, sorry but you aren’t ready for real life trading when things will be much more hairy. Work on it.
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