With the ease of setting up trading accounts and executing trades from a computer, day trading is no longer a job reserved for professionals from trading firms.
Today, everyone can trade. Amidst the growing number of amateur day traders today, how can you stand out and be a good day trader?
Here are five traits you need to embrace to set you on the path to success as a day trader.
- Discipline
The most important trait a trader should possess is the toughest to master too.
In a volatile environment such as the stock market, it is crucial to stay disciplined and execute trades according to your trading plan and make logical decisions under stress.
The majority of a trading day should be spent on monitoring your positions, not relentlessly switching your positions when there is a movement in price.
Trading discipline entails executing swiftly too. When stop losses are triggered, good day traders will execute their sell order immediately without questioning themselves and run the risk of the price dropping even further.
2. Patience
The fluctuating nature of the stock market represents constant opportunities to trade on. Similarly, there are countless traps for one to fall in to too.
Therefore, day traders need to be patient and avoid the temptation to capture opportunities to make a quick profit.
Instead, they need to have the discipline and patience to concentrate on their portfolio and focus on generating the best results from it.
3. Adaptability
No two days in the market are ever the same. Day traders need to be adaptable and aware of the evolving changes in the market to respond accordingly to them.
They should look past textbook trading strategies and be critical thinkers who can alter these strategies to the situation in which they are deployed.
Not adapting to real-time market conditions will often result in a swift drawdown of capital.
4. Resilience
Even the best traders lose a good portion of their trades.
However, the difference between a winning and losing trader is that the winners pocket more on their winning trades than they lose on their losers.
Hence, it is important for one to remain resilient in the face of losing trades to prevent themselves from spiraling into a losing streak and seeing their losses pile.
Instead, they should evaluate the reasons behind their losing trades to further refine their trading plan and make it more robust to downturns.
Day trading is a high-risk job and there will be days when there are net daily losses. Resilient day traders who can bounce back from these challenges will be the ones who will go on and make winning trades to turn their portfolios around.
5. Learn
The top day traders are always students of the market.
They never get complacent and are always on the lookout for ways to further analyze the company and market to make better trades.
Novice day traders can read up on investment books to broaden their knowledge of trading or seek mentors for advice on best practices.
Ultimately, there are no shortcuts to success as a day trader. The best day traders are those who have dedicated more effort to honing their craft but you can be sure they have these five traits in abundance.
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