A lot of people are trying their hands at day trading lately, choosing Forex, stocks and futures most often. There is a vast potential to make a lot of money when day trading, but you need to know the right information. Use these great price action day trading tips to ensure trading success when learning to day trade. Be sure that by the time you finish this article that you understand the importance of being able to read a price chart.
Be careful of being superstitious. Many people think superstition is simply an old wives tale, but if you don’t feel comfortable when you start your trading day, then you will increase the chances that something might be slightly off with your trading for the day and your internal thought process may be sending you a message. Listen to your inner voice, and if something is bothering you about the market or your trades, or even your personal life, take a break and come back later or even tomorrow, as there will always be more trades..
Choose an account type that is suited to your needs. While the number of account types can be confusing, in general, lower leverage is better. Mini accounts are great for beginners, but if you already have the basics of day trading down, a standard account is probably your best bet. Also, we prefer to trade futures over stocks and Forex when day trading, as futures take less capital and have much better leverage than stocks, while also being much better regulated than Forex. We avoid Forex for the very reason that it is not a well regulated market!
The only way to really learn to day trade the futures market is to actually jump in and start trading on your own with the simulator at a very minimum. Prior studying is necessary, but real trading knowledge works best when trying to learn to trade profitably. Set aside a certain amount of hours and dollars that you can afford to give up when learning to trade, while also being content with the fact that this time and money you are going to donate to someone else’s trading account is actually an investment in your trading education. Consider it like start up capital just as you would with any new venture. Before you quit or even consider leaving your regular job, spend an hour or more every day taking simulated trades while using a very small sum of money. What you will find is that over time, you will begin to get much better and it would be wise to find out if futures trading is something you are going to enjoy and be successful at before giving up any current career opportunities.
When day trading, one tool that is a must is high-speed internet such as cable or DSL. You will want to ensure that you have the latest information at your fingertips as soon as you need it. Even if you’re trading on long-term trends and day charts, it’s imperative that you have a reliable and fast Internet connection or you could cost yourself a lot of money by not being able to quickly and easily enter and exit your trades. Speed is an essential ingredient when day trading, so we also suggest that you use automated strategies that automate portions of your trade for you. This ensures that you get quick entries and that you get in early in the que with your orders, as they are executed on a first in, first out basis in the futures markets.
As we stated earlier, make sure you do not trade if you are feeling sick or even down emotionally. Your physical condition should be good and you should be well emotionally when you are thinking about making trades, as heavy analysis is required and you cannot afford to have any distractions when you are trading. Only trade when you are feeling your best, as this will help you maximize your profits. If you are sick physically or even emotionally, you are setting yourself up for failure and it would be better if you would simply consider taking time off. Being emotionally down can be more harmful to your trading than being physically sick, as trading alone is a very emotional process. This may seem trivial to you, but it is one of the most important rules in trading.
Understand that trading is not a get-rich-quick scheme. The best traders have had many years of trading experience, so they have a large advantage over you in most cases. The majority of day traders fail for the very reason that they think that day trading is a get rich quick endeavor. Understand that it will take you time to become profitable and a steady as you go attitude with a small profit each day will add up much quicker than you can imagine. Also, understand that you will likely not be able to support yourself with your futures trading right away, so be prepared that it will take you time and lot’s of hard work before any really consistent income will be seen from all of your efforts.
Make sure you get yourself as well educated in the futures trading field as possible. You don’t necessarily have to enroll in formal college classes to learn how to trade profitably, but you need a proven strategy or you will slowly churn your account away giving your trading funds to someone that does have a good strategy. Read available literature that is known to work while finding relevant books that are sound in trading philosophy. If you are armed with the best skills and knowledge you will be able to find success and use this success to your benefit. Be wary of high priced trading programs that promise you quick success, as there are many snake oil salesmen hawking their wares in this business.
If you insist on trading currencies, do so only through currency futures markets, and avoid Forex markets like the plague, and trade only with the proper leverage for your account size. Trading with the right leverage will minimize your chance of loss, and trading with too many contracts or too much leverage can create large losses or gains. If you do not have a proper strategy, you may find yourself wiped out within just a few trades due to only a couple of very large losses. It will fill good if you are lucky enough to win big on your first big trade or two, but it only takes one big loser to set you back considerably, or even worse, wipe out your trading account in full.
Before you open an account with real money, you should only trade through a good simulator program. This will allow you to get the exact same trading experience without the usual risk of trading a live account with your real money. Analyze your performance and when you feel comfortable entering the market, make your transition into a real money account. Always make certain that you utilize proper risk control and never allow yourself to use more than 3-4 percent of your trading capital on any single trade. You should also know where you will exit your trades in advance, because if you wait until after your trade is in progress, you risk the chance of fear shaking you out too early, or even worse, taking you out of your trade too late! If your losses hit your your maximum loss amounts for the day, get up and take a break or stop trading for the day. It’s amazing what a little time analyzing a bad day can do for you, because it helps clarify what you did wrong and it will hopeully reduce the chances of you making the same mistake twice.
When it comes to deciding on which markets to trade each day, you should never attempt to trade more than one market at a time. It can be a very dangerous and unwise decision to simply pick and choose trading markets, especially if you do not know what you are doing. When choosing a market to trade each day, make sure you only open a single chart in a single market and that you concentrate on learning that market well. Every market has it’s own individual personality and tendencies, so it’s wise to learn those before you trade it. If you simply jump from one market to the next, you will never learn a market well enough to make money consistently.
If you are new to futures trading, it is generally a good idea to take it slow. Start with single contracts until you begin to feel comfortable with all aspects of trading. This will avoid any costly mistakes that most beginners find themselves succumbing too and will give you valuable knowledge without taking on too much risk. Also, never think that you can see the future when it comes to day trading. Futures markets are impossible to predict more than a swing or two out and nothing is ever written in stone when it comes to price action movement, so do not allow yourself to get suckered into trading by anyone who says differently. These trading gurus only want your money, and they count on new traders like you to be able to continue to churn a profit. Make sure that you understand that indicators do not work, and the best traders all know and understand how to read a price chart, even if they call it something other than price action trading. Understand that you will eventually have to become proficient at reading a price chart yourself if you plan to make it in the day trading business.
As discussed previously, emotion is not part of a price action day trading strategy, so do not let fear, greed, or hope dictate your trades. Follow your plan, not your emotions. Trading with your emotions always leads you down the wrong path, so it is not part of a successful day trading strategy. This is why we suggested earlier in this article that you should never trade when you are not emotionally well or stable, as you are simply asking for trouble if you do! Controlling your emotions will be the hardest part of learning to trade, and while that won’t make sense to you now, if you succeed in this business, it will be perfectly clear as to what this means once you arrive or make it as a successful day trader.
As shown in the beginning of this article, there is a huge opportunity for success as a day trader, and particularly futures day traders. While getting your fee wet, you will need all the reliable information that you can find in order to help you to succeed. Use the advice in this article to keep you out of trouble, while continuing to study and practice every day. We also suggest that you learn how to read a price action chart in order to become proficient when trading against the best traders in the world. If you are interested in learning how to trade price action, check out Mack’s price action trading course at http://priceactiontradingsystem.com/pats-price-action-trading-manual/. You will be glad you did! We hope you enjoyed these price action day trading tips to ensure trading success.