If you decide to start trading, you need to be aware of one simple fact – trading is one of the hardest things you will ever do. More than 90% of people who try their hand at trading will fail. So, what’s the secret of those who succeed? Winners have these 5 habits.
You’ll recognize a successful trader by these:
1. Early Bird
Waking up at 9 am on a trading day is definitely not a habit of a successful day trader. In order to get into the right mindset for the day, you have to wake up early. You need to establish a pre-trading routine, and you do not want to rush it. As it’s necessary to make a lot of decisions quickly and under a lot of pressure, you have to be completely alert by the moment the market opens. A good way to wake up and speed up your blood circulation is taking a walk at least half an hour before the market opens.
2. First research, then everything else
You need to research every stock on your watchlist each morning before the market opens. If you trade a stock and you don’t really understand why it’s moving, you can mess up everything. And if you don’t prepare for the day that is ahead, that will show in your trading. You won’t know why the stock is moving, what is its context, nor what your bias is supposed to be. Because of all of that, you will trade with less confidence and more uncertainty. That is why you need to know the catalysts of the stocks on your watchlist in advance. Before the market opens, you need to be aware of their resistance intraday on their daily charts, as well as of their key support levels. Also, before starting, you have to know which are your entry and exit levels.
3. The trading plan is like a Bible
A successful day trader will prepare a plan for each and every scenario for stocks on his watchlist. You need to know exactly where you enter, where you stop out and take your profits before entering the trade. If you don’t make this plan in advance, your trading will be significantly more stressful, not to mention more difficult.
Also, you have to prepare a plan for what the stock on your watchlist could do, and prepare entry strategy adjustments that are in accordance with that. Will you wait for a pullback if a stock opens strong? What will you do if a stock opens weak? You must be aware that anything can happen in day trading. If you really want to succeed, you have to have a plan and stick to it. Set a path, and follow it. Stepping away can lead to immense loses, or investing more than you can afford.
4. Trading every day is not a must
Best of the best are aware that good opportunities don’t pop up every day. They know that they don’t need to trade each and every day. It’s impossible to make trading opportunities by sheer willpower, so you have to be able to see when there’s nothing worth the while. It’s not all about having winning trades. If you want to grow your trading account, you must know that avoiding losing trades is just as important as making a profit on the winning ones. Have your criteria in line, know what makes a stock the perfect choice for you. This way, you will always know when to sit still, and when to act.
5. Retraces his steps
If you don’t reflect on your past trades, you won’t improve, you won’t become successful. Pay attention to your winning trades, find what they all have in common, so you can find others like them. Do the same for the losing ones – see what’s mutual for those, and learn how to eliminate your habits that lead to them, habits that made you stray from your trading plan.