It's no secret that trading is one of the hardest endeavors you will ever undertake. 90%+ of the people who try this do not succeed. So what do the winning traders do that the rest don’t? Winning traders develop winning habits. Here are 5 habits that every successful day trader does.
1. Wakes Up Early
I’ve never met a successful day trader who wakes up 9am every trading day. Waking up early is crucial for getting into the right mindset for the day. You don’t want to make your pre-trading routine rushed. Day trading requires a lot of quick decisions under pressure so it is crucial that you're fully awake and alert by the time the market opens. Going for a walk an hour or so before the market opens is a good way to get your blood moving and wake you up.
2. Pre-Market Research
All of the research on all the stocks on your watchlist should be done before the market opens. Trading a stock without fully understanding why it’s moving is a sin. The lack of preparation will show up in your trading that day. You will trade with a lot more uncertainty and lack confidence because you're not completely aware of the stock’s context, why it is moving, and what your bias should be. Before the market opens, you should know the catalysts of all the stocks on your watchlist, their key levels of support and resistance intraday on their daily charts, and what levels you will be looking to enter and exit.
3. Follows Their Trading Plan
Every successful day trader prepares a plan for every scenario of the stocks on their watchlist. They know exactly where they will enter, stop out, and take profits before they enter the trade. Your trading will be so much more stressful and difficult if you don’t make a trading plan beforehand. You also need to prepare for what the stock could do, and adjust your entry strategy accordingly. If XYZ stock opens weak what will you do? If XYZ opens strong will you wait for a pullback? In trading anything can happen. You need to have a plan and stick to it in order to succeed. Deviating from your trading plan will lead to huge losses or you leaving a lot of money on the table.
4. Knows They Don’t Have To Trade Every Day
Winning traders know that there will not be good opportunities every day. It is okay to not trade every day. You cannot create trading opportunities, so you need to be able to recognize when there's nothing worth your mental capital. Trading is a game where you can win and lose money. Growing your trading account is just as much about avoiding losing trades as it is about having winning ones. You need to know what criteria of a stock that makes it an A+ opportunity for you. This will make it easy for you to know when you should be sitting on your hands or when you should be hammering it with large size.
5. Reflects on Trades
What doesn’t get measured, doesn’t get improved. I have never met a successful day trader who doesn’t track their trades. You need to look at your winning trades and see what they have in common so you can replicate it in the future. For losing trades, you need to identify what they have in common. You then need to eliminate the habits that lead to the losing trades, if they were outside of your trading plan. Not all losing trades are bad. Trading is a game where losing trades are unavoidable. However if a loss is because you broke your trading rules, you need to figure why it happened and what you can do to prevent it in the future. Tradervue.com is a great site where you can upload and journal all your trades, and see exactly where you entered and exited.
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