You know it! The only reason you are into trading is to make the best of it. You’ve finally found a skill that’s worth your time and climbing the ladder of success seems like a long way to go. For many beginners, their worst nightmare is building effective day trading habits. As a beginner, you never know what works, you have to depend on a series of classes and signals until you discover what works for you.
We know building successful day trading habits is one of the things that keep you awake at night after going through the stress of trading in the day. Nothing in trading works all the time as any funded trader in the ToroChallenge will attest to, but there’s always a way to the top.
It is not an accident that many efficient market veterans adhere to certain habits and rules when developing a trading plan. This post will provide you insights into the mindset of successful traders, follow these tips and watch your trading results improve.
Research and practice
One of the first-day trading habits you should build is researching your chosen verticals. Discover what success and failure look like so that you can decide what and when to trade.
Successful traders practice and refine their trading strategies. Back-testing and paper-trading are the flight simulators of trading. They let you build, test, and re-test, whatever your trading approach may be. Logging time with simulated trades will help condition you to remain consistent when the market may not be.
Successful traders make or lose money by design—not by accident. Using the powerful match engine simulation created by Trader2B is the perfect way to build day trading habits that work.
Stop before your day trading habits go wrong
While you are researching and practising, also try not to get overly emotional with an investment. This takes a lot of discipline, especially when you’re expecting a positive outcome from the investment. If it’s not making profits and there are no signs of profits, then it’s time to opt-out and relearns. No one likes to lose money but one of the best trading habits is accepting losses as part of the cost of trading. You can control how much you lose if you have a stop loss in place at all times.
Successful traders make or lose money by design—not by accident. Using the powerful match engine simulation created by Trader2B is the perfect way to build day trading habits that work.
Balancing risk rather than chasing profit.
Successful traders are good managers of their money and the risks of the market. Those same markets have a way of punishing those that aren’t. Seasoned traders establish their exit points as well as their target profit point before entering a trade. Good traders make sure that their risk in any trade, or group of trades, will not derail them financially or psychologically. People only lose the farm if they bet it in the first place. A reasonable trade plan should include a balance of risk and reward. Establish reasonable expectations for a targeted rate of return. Learn to distinguish between successful trading and luck.
Plan the trade and trade the plan
Successful day traders are only at the top because they never trade without a well-conceived game plan. Following established rules may help you survive and thrive in the market, but no set of rules works every time. combining tried and tested rules, understanding what rule works in certain situations will get you to the top. These rules help you form a trading plan and they are the compass that helps you navigate the market’s stormy weather.
It is important to plan each step of each trade and then execute the plan. People who trade without specific rules and a clear plan, or those that have rules and plans they don’t follow, are at the market’s mercy. Good traders follow their rules and trade their plans.
Day trading habits with few pairs
If you are armed with too much information, sticking to one or two currencies for trading might be difficult because of the need to test what works. but before you try every pair at once, take it slow and focus on a few pairs. That’s what the pros do! apart from giving you a better feel of the market especially for price level and price behaviour.
When you focus on a few pairs, it narrows the information and data that needs to be monitored and it gives you time to strategize and adjust your tactics within the few pairs you have chosen.
Recommended: How to Become a Successful Day Trader
Approach trading methodically
Many successful traders use checklists as a tool to help them validate that they are thinking through their trading decisions, rather than reacting impulsively to market fluctuations. A best-selling book titled The Checklist Manifesto, by Atul Gawande, supports this idea. Based on research conducted primarily in hospitals, its central finding was that failure is more closely a result of ineptitude (not properly applying what we know works) vs. ignorance (not knowing enough about what works).
We’ve talked about the importance of a plan. Once a plan is in place and has been tested, it needs to be followed. When evaluating your plan, look for the following three characteristics.
Consistency—it’s not only about building day trading habits it’s about being consistent. Is what you’re about to do consistent with your trade plan? Consistency is critical because it helps us track and potentially improve performance. How can you isolate what’s not working if each trade has its own set of rules? Consistency gives you a much better chance to replicate what is working and to adjust what isn’t.
Efficiency—Are you filtering and managing data efficiently? Are you maximizing the tools available? Limited time exists to filter market information and there are thousands of possible opportunities. It is important to find rules and tools that will help you reduce the market to a manageable size and identify opportunities.
Objectivity—Are you staying true to your plan? Let your process dictate your actions. Without this direction, emotion may begin to influence your decisions.
Trade with the trend.
Trading is like playing a game, you are always trying to stay ahead of your competition. The best way you can do this is with information. Successful day traders form day trading habits that help them stay on top of their game. one of them is understanding the trends and using them to predict future events or consequences. They consider actions and reactions to trends and construct trading strategies based on
Many traders follow a trend that is already in place and ride the wave as far as they can. This, in and of itself, influences the market. Others work hard to predict the beginning of the next big trend or try to pick the top or the bottom of the market. Sometimes going with the crowd makes sense. Following an established trend, while carefully managing downside risk, is favoured by many well-known traders. An adage of floor traders is, “The trend is your friend.”
Conclusion
Let’s not pretend that these tips are the only things you need to succeed. If you don’t learn more, practice consistently, plan and strategize, these tips might not work for you. These are just a few day trading habits embraced by seasoned traders.
It is important to remember that many ‘good habits’ are simple enough to understand, but not necessarily easy to always practice. Over time, you may develop other habits that support your trading strategy. You may wish to write them all down and even keep them in a visible place if your goal is to become funded.
Successful day trading habits are not so much about your emotions. your strategies and actions that make the difference. Market sage Warren Buffet famously said, “The chains of habit are too light to be felt until they are too heavy to be broken.” So, choose your habits wisely.
