If you really want to improve your day trading ability, you must learn to read a chart, which is what we refer to as price action trading. What the average day trader does not realize though is that they can become a better price action day trader by studying their charts at the end of every trading day. Here is what I would like you to think about for just a moment. How long do you think it takes for a medical doctor such as a surgeon to learn his trade? How long does it take for a professional golfer to earn his PGA credentials? These are just two examples, but hopefully you realize that it takes years of study, practice and hard work to even become proficient at these professions, much less to reach the pinnacle of success in them. What you must learn is that day trading is no different. It takes years of study, practice and hard work to become even proficient as a day trader.
It is almost impossible for anyone to learn to day trade profitably on a consistent basis in only a few short months of practice or actual trading time. If you are going to make it as a day trader, then you are going to have to commit to the fact that you will need to study, practice and gain experience trading on a simulator for a very long time before you are going to even begin to learn to trade profitably.
Trading is just that difficult and it takes dedication and perseverance for even the most gifted and best equipped persons to success in this profession. Just like some people will never succeed as a doctor or a professional golfer, some people will never succeed as a trader. Many people fail at trading because they do not have the skills or the personality for it. Secondly, for someone that wants to become a doctor or lawyer, there is a prescribed curriculum that you must pass before ever even getting started in actual practice.
When it comes to learning to trade, there is no prescribed curriculum and there are as many trading ideas as there are actual people trying to trade, and the majority of these trading plans are just plain wrong to begin with, so the deck is stacked against you before you even get started. The odds of finding a profitable trading strategy are about as difficult as it is to make it as a trader in this business, and the accepted rate of failure is about 9 of every 10 traders. Think about that for a moment: If only 10% of traders actually survive, then the odds are stacked very highly against you. Below is an article that we found at www.soullfire.xanga.com that discusses this even further, so we wanted to include a small excerpt for you that indicates that maybe there is some hope for you if you want to be a day trader. Below is what that article had to say.
The generally spouted statistic is that over 80% of day traders wind up being unsuccessful with a net loss of money.
Some studies back up that statement. One example is the record of one group of day traders at a firm called Tuco Trading, whose records were called into court due to a legal matter and became public:
Out of 206 traders:
33 were profitable (16% of total)
7 had accounts > $50k (3% of total)
173 unprofitable (84% of total)
57 had losses over $10k – (28% of total)
Another example is a study that was done in Taiwan (Titled: Do Individual Day Traders Make Money? Evidence from Taiwan)– found that their analysis indicated that 82% of those engaging in day trading were unsuccessful, with a relationship showing that the more casual (infrequent) the day trader was, the more likely they would be unsuccessful at it.
So with the odds for success so low- less than 20%, many articles have been written using data similar to that stated above advising against attempting to day trade, as the risk of failure is very high.
While this advice may be well intentioned, it’s also highly misleading. If you think about it, just about every well paying profession has a much smaller success rate compared to all the people who try to obtain it. You can read the rest of the original article here.
We tend to agree that the failure rate for day traders is probably not much different than the failure rate for any high paying profession. How many medical or engineering students fail out of school every year and how many actually go on to succeed in those professions? So, if some people do actually achieve success as a day trader, how do they do it and what is the best way to ensure success? We believe that day trading success occurs the same way someone succeeds as a doctor, lawyer or professional athlete. They must first have the aptitude, and then, they must apply themselves by educating themselves properly. This means that they need the correct learning materials, which would translate to a good education at the right school of learning, but most importantly, by learning the proper information and skills.
We can help you with the proper trading tools, because we believe that the only way to trade profitably is to learn to read a price chart, and you do that by learning price action trading techniques. There is no holy grail when it comes to trading set ups, so in order to learn to trade, you have to learn to understand what prices are telling you as they print to a chart. There absolutely is no indicator or holy grail trading set up that will read a price chart for you. This is a learned skill that takes time, effort and most of all, study! We have found that the best way to learn to become a trader is to get on the simulator and start trading. Don’t worry about getting it right or wrong, but use the techniques and rules that we teach in our price action trading system and try to apply them as best you can each day. Then, go back at the end of every trading day and study your work. Try to figure out what you did right and continue doing that. Just as importantly, try and figure out what you did wrong and why your losing trades failed, or why you misread the price action, and then try and correct those errors the next day.
What you will find is that you will slowly learn to see all of the best set ups “after the fact” as you are studying your charts. Before long you will be able to glance at a chart in only a moment and point out all of the best entry points, while also understanding why prices did what they did at those points. No longer will you be scratching your head and wondering why prices exploded higher or collapsed suddenly and without warning. You will know why and it will begin to make sense to you. With time, you will slowly begin to see these set ups in real time too, although that is where the diligent practice comes in, much like hitting thousands of gold balls every day on your way to winning a PGA tournament!
You will slowly become a better price action day trader by studying your trading chart at the end of every trading day. We aren’t talking about a few days or a few weeks of practice and study time either. It will take many months and maybe even years of hard work, effort and chart study to achieve success in this profession. If you make it though, the rewards can be great. If you would like to learn more about our price action day trading strategies, you can find that information at http://priceactiontradingsystem.com/pats-price-action-trading-manual/.