I’m often sharing my thoughts on day trading, and since I concentrate on price action day trading, I’m certainly biased in my thinking about the most important steps to becoming a day trader and what it take to succeed as a real life day trader. However, whenever I read or discuss day trading with another successful trader, it’s amazing as to how closely our discussions will be on the overall theme of what it takes to make it as a day trader. What I really find interesting is that it never fails to come out that these successful day traders have actually learned to read a price chart. They probably don’t call their trading style price action trading either, although they might. However, whenever I discuss any of their trading thoughts or decisions in detail, in the end it is evident that they are quite adept at reading a price chart, so that is the first step in learning to day trade in my personal opinion.
Step two is the second part of the success equation for day traders. While it’s probably the key ingredient to success, it’s the much easier part of the equation to point out with other successful traders. What is most interesting though is that this part of day trading is the least discussed part for unsuccessful day traders, or at least for non profitable day traders. I believe that the reason for this is that most traders are too busy searching for the holy grail and jumping from one losing strategy to the next to ever make it in the trading business long enough to even begin to address this part of trading that is the essential key really. What we are talking about is the ability to remove your emotions from the task. When your emotions are involved, which is nothing more than fear and greed that continually plays on your decision making, you will always make mistakes, and it’s these mistakes that will harm you the most when day trading.
If you truly want to make it as a day trader, you must start today in the task of learning to read and understand a price chart. However, no matter how good you become at that task, the second task is that you must learn to control and separate your emotions from your trading as well. Even if you can read a price chart like a pro, if you allow fear or greed to overshadow your decision making, you will still lose money. What you will find is that when you see the best set ups, fear will talk you out of entering the trade and you will either enter late or not at all. Then when you have watched prices do exactly what you thought several consecutive times without you taking action, you will finally lose patience with yourself and force yourself to enter into a terrible trade. In turn, this trade will quickly turn into a losing trade. This is fear and greed working on you and it’s common for most every day trader.
Take a moment to read some of the following excerpt we found at www.businessinsider.com in which they interview this day trader. See if you don’t agree that there is that common thread that we just discussed in the above paragraphs.
What happened on your best month of trading?: Q2 earnings season of 2011 I hit my profit target consistently, doubling or tripling up most days, with only several losing mornings in the month. I recorded most of the trades and shared them online, and also packaged the reviews into a few powerpoints through google docs. They’re all free. I’m a huge fan of the free sharing of education, which is seemingly impossible to come by nowadays.
What happened on your worst month of trading:? I over-traded and lost a decent chunk. What else can I say? I’ve never had a loss that broke my bank and I never take more risk than I can afford. Loss is step in growth, so expect it.
What did you do/buy with the money from your first big trade?: Before I got into trading I had been in nearly every type of sales job you could think of. I didn’t make a fortune by any means, but I made much more than I was used to growing up. I bought all kinds of dumb things: clothes I never wore, a car I rarely drove, etc. I learned my lesson on spending feverishly. When I finally started making money trading I left it in my account and I rarely withdraw unless I’m transferring between accounts.
Do you have a favorite trading platform?: I started out using thinkorswim and still love the charts on that platform. I never traded options so I never got to fully utilize the features – but I’ve got to say my favorite platform for executions and level 2 speed is Lightspeed. I used DAS trader for a brief period and it worked pretty well also, similar to Lightspeed.
What is the most important quality a trader should have?: You’ll hear it from everyone – but you have to detach yourself from the emotion of money. If you open a trading account you should go into it fully prepared to lose every dime. You also have to be able to take hard punches to the jaw and pick yourself up off the canvas every day. You can read the rest of the original article here.
Hopefully you can clearly see the subtle hints that go along with the points that I am trying to get across to you in this article. While the trader doesn’t really discuss his overall trading strategy, I would strongly suggest that first and foremost, he has a great understanding of how to read a price chart, which in our terms means that he uses some form of price action trading. Yes, he may use some additional tools, and maybe even has indicators on his chart, but those are not really necessary if you are able to ween yourself off of them properly. We use a few simple tools ourselves, but mostly only trend lines and support or resistance lines, but those only help to improve the visual representation of the price action in the end as long as you don’t allow them to over clutter the pictures on your chart. Yes, too many lines will clutter your vision, so don’t over do it with those important lines either.
In conclusion, we thing there are two main themes of becoming a profitable day trader in any market. One is to learn to read a price chart, and if you want to do that, see our price action trading course and see if it is something that might benefit you and your trading results. Secondly, understand the importance that psychology plays in your ability to trade profitably. Understand that you must learn to detach your emotions from your trading. You must learn to enter and exit the market at will without your mind playing tricks on you. In the end, these will be the most important steps to becoming a day trader that makes money on a consistent and long term basis. Learn how you can become a price action trader by checking out our information at http://priceactiontradingsystem.com/pats-price-action-trading-manual/.