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vikkktor

Tips for a Begining Day Trader

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you can call it killer instinct,

you can call it discipline,

or you can call it cool-calm-execution...

 

call it whatever you may,

the name doesn't matter,

 

the fact is,

despite all the good intentions,

educations,

preparation,

calculation,

some people just cannot pull the trigger at opportune times...

 

be thankful if you can,

have pride in knowing that you are a selected few...

 

 

 

 

I will leave the 2nd one for people to chime in...

 

Good note. Thanks so much for sharing.

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In my view, beginning traders should begin with the right mindset. Trading should be considered a business venture. I believe it is important to create a firm foundation for yourself prior to risking real money on real trades. You could get a mentor, and begin developing good trade habits. For me, after learning the very basics like what a long and short are, and proper risk management, I had to learn how to manually backtest. I learned the hard way before I had my lightbulb moment, the realization of the importance to backtesting. That changed everything for me. It helped put things in perspective as I learned about the relationship between wins, losses and the bigger picture; the equity curve itself.

 

Imagine this: A winning strategy, one that wins 2/3 of the time, still can and will have a losing streak, possible 10 losses in a row, for example. That's enough to get most traders to quit - to throw the baby out with the bathwater. That's what inexperienced traders do, who haven't backtested and who don't understand the win/loss relationship of their trade system. The best trades follow the losses and after the beginner quits with his losses, the trader who adequately backtested has the confidence to understand that the winners will come and propel the equity curve to new profit levels. 10 losses in a row might be rare and extreme but it happens even to the best systems. But 4 losses in a row is enough to make most inexperienced traders quit, and yet the winniest systems get 4 losses in a row with regularity. Backtesting opens up your vision and if you take a businesslike approach, and realize that losses are apart of winning, you will be in a much better position to succeed.

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My humble ramblings only ....

 

1. Trading is 80% you not method so belief is the main core of you and if you believe you can do it, then you will do it.

2. Don't treat you trading account as real money. Think in points/pips not $$$.

3. Once you've mastered 1 and 2 and a method and have a decent edge, compound the hell of of you account to millionaire status in less than a year :)

4. Patience

5. Patience

6. Patience...

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In my opinion if you want to be successful in the daytrading world you need to follow a few important steps...

 

First you need to find a system that puts the odds in your favor. While there are many systems out there that have been proven to be successful you need to make sure you find one that fits your style. You could have 5 different people trading the same system on the same market with different results. Everyone is going to trade a little differently.

 

Once you find a system that fits your style and has been proven to put the odds in your favor then you need to also find a market (or markets) that fit your style. There are many markets out there that are really profitable that I just can't trade. The ES is probably the most popular futures market out there. However, I can't trade it successfully. It just doesn't fit my trading style.

 

After finding a system that puts the odds in your favor and a few markets that fit your style you need to build a trade plan that you can follow each and every session. This trade plan needs to include your start time, end time, rules for entry, rules for exit, money management rules, rules for news events, and anything else that might come up throughout the session on your given market. Basically my goal is to have a rule for every situation that comes up so I don't sit there frozen in real time not knowing what to do.

 

All of the above steps will help build your confidence in your system. Trading with confidence is one of the most important factors in trading. Daytrading forces you to make quick decisions and having confidence in your system and trade plan will allow you to do just that.

 

Hope this helps.

 

Cuttshot

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Excellent post Cuttshot. I couldn't agree with you more. There are many styles and what works for one won't necessarily work for someone else. In fact, for sure it won't unless the trader takes the time to learn it and understand it, fully. You can see someone else succeeding with a method of trading, and you can say to yourself, all I have to do is follow the rules that that guy is using and winning with, and I'll achieve the level of success that he is.

 

I believe this sort of idea will not work for most people, unless that person really works hard in learning that system and, the type of trade results it will get over time. That includes the string of losses that will pop up randomly. Most people who try to copy someone else's method without laying the foundation for themselves, will lose confidence quickly and end up quitting, sadly, right at the wrong time. They'll quit with their losses in hand and then watch from the sidelines as the winners start pouring in again. I've been there. I've done that. I've learned my lesson the hard way as I am sure so many others have, as well.

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The right education is a tough call. What is right? There are a lot of good webinars and free education content out there. Most of those sites are all trying to sell you something, so just don't bit into that. Thre are a million thigs for sale and you don't want to waste your money on junk. So avoid any robots or auto trade systems.

 

Use this website and the other traders here to learn. Attend some free teacing seminars or free trials. Check the feedback on those companies before you do any sort of free trial. I have attened many good educational webinars that reinforce what all traders need to hear.

 

The last thing I will say is, focus on one market that you like or want to trade, then do the research and training on that. That way you are not looking all over the place at all different kinds of markets.

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I agree worldtrader there are a lot of systems and educational programs out there for sale and a lot of them are junk. However, if you look hard enough you will find some systems that have proven to be successful over time. I would also make sure to stay clear of autotraded systems and robots.

 

If you want to become a successful trader yourself then you need to take the time to learn how the markets move. Robots might work for a period of time but markets change over time. You need a system that is able to adjust to the changing market conditions.

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One thing to be careful of is to not fall prey to the promise of easy profits in the markets. There are many seductive adds out there and many seek to alleviate the responsibility that one really must take for their own success. They promise everything, short of the holy grail itself, and if a beginning trader throws their money at such dreams, then many will make the next big mistake, which is to blame their failure on the magic system that they just invested in. A very beginning tip to succeeding as a trader is to be committed to taking responsibility for ALL your trade decisions. Decide to learn how to trade vs. to be told what to trade, for example. Every trade decision (or lack there of) comes with a consequence. You should know what that consequence could be, worse case, before making any decisions.

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For the new emini traders......... I just started up a website that should assist you in preparing for, or re-directing your trading journey.

 

 

(Moderator: Promotional URL removed)

 

My best point of advice for a new trader is to STOP TRADING NOW if you are losing money. Your performance will not magically turn around. Wishing and "should have would have could have" does not have any place for insertion into your trading plan.

 

My second piece of advice: If you do not have a written trading strategy then, again, STOP TRADING NOW! Conduct your own research and get a plan generated. Regardless if it takes you 6 months to do it, just get it done. Or, you can keep trading and lose all of your money.

 

Thanks.....

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Hi Vik,

 

If you haven't realized now, let me be the first to tell you. You do not have to be the smartest person to be a successful trader. You say you've studied a lot about day trading. And I say good for you. You've taken one of the first steps. I am a firm believer that the best way to learn is through experience. So, now that's you've taken the first steps, you still have 95% more to learn. If you have the capital, slowly dive right in, only after assuming you have a well planned trading strategy. I'll be the first to say it, expect to take losses in the beginning. Be sure to make them small losses with huge lessons learned. Option 2 would be to start a virtual trading account with play money. Practice Practice Practice.

 

*Good luck on you next trade*

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In reviewing this thread I see a lot of great pearls of trading wisdom. Sometimes people look at the date of a thread and think "it's old, that doesn't apply" but much of what is discussed here is very universal.

 

What I'm most curious about is if the original poster, now a year later is still involved in trading? With such a high attrition rate, there was some great initial advice here but there's definitely curiosity on my part so if you're out there - let us know :)

 

Regardless, the thread is worth of a review for Beginner traders for certain.

 

MMS

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As a beginner myself, I think the best advice I can give to you is to HAVE A SECONDARY SOURCE OF INCOME and USE MONEY THAT YOU CAN AFFORD TO LOSE...

 

sorry for the caps, but I really wanted to stress those things to you... I dont think I need to elaborate on it, but I will.. When you are relaxed and dont need potential trading profits in order to survive, you will be more lucid and calm in your approach to trading and thus reducing mistakes, reducing what I call the "gambling factor". Putting too much of your account at risk or making highly risky (i.e great potential reward) trades.. Also with using money you can afford to lose, you wont freeze up and get mentally devastated after a few losses..

 

Secondary to that is before you get any nifty charts, or pay for anything, get your feet wet trading using REAL money.. albeit a small amount and get a feel for the price action, real-time, real money trading situations... And it's then and only then, should you know what you NEED or may have to pay for as a tool for your trading business...

 

Write down and keep meticulous records of everything you do.. Including things like why you entered a trade and how you felt after you entered or how you felt while you were in the trade and the trade was either successful or not...

 

Trading is a gradual process where experience, mental state, character under pressure and knowledge mix to make you a successful trader..

 

You MUST BELIEVE that you will be successful at this.. Otherwise, do not even attempt it.. DO YOUR BEST to steer clear of people that tell you that "majority of other traders fail and thus you may fail as well" That kind of thinking will already put you at a disadvantage that will subconsciously have you believing that you too, wont be successful at this..

 

 

Please, make sure you know all these things BEFORE you pay for anything or invest any substantial amount of money into trading...

 

Of course, I feel the need to say it so people wont get confused... That goes along with all the other things that you would naturally do.. i.e. reading books, attending seminars, getting a mentor.. etc.. etc..

 

Just offering my 2 cents.. Take it with a grain of salt as I'm also a beginner and havent made any substantial amount of money trading...

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Great post Rainmaker - well done.

 

I think you sum up really several of the most important points that any beginner trader should really take to heart.

 

I won't reiterate what you've written because I completely agree. Even though most will struggle to follow the advice because some of it goes against human nature -- but you must battle those urges not to follow it.

 

One thing I find important is to understand that though there are clearly books, courses, software, strategy, etc... that might overstate their value, there is a place for education, there is a place for purchasing products -- sometimes I have found that what I've purchased maybe didn't live up to my expectations (which sometimes were unrealistic anyway) but it does something that gets you thinking and getting creative and many times inspires an idea that proves valuable. Just realize you shouldn't go overboard since like you mentioned, gotta protect that capital to last long enough to make it.

 

MMS

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