When a new day trader looks at the price chart of any assets, like foreign exchange currency pair, stocks, or futures contract, he or she may think that to gain money by day trading is easy. Many of them focus on the big moves wanting to gain a big fortune.
However, many of those new day traders do not know that the most essential thing in day trading is the amount of time spent on the learning and practicing to get sufficient experience. That experience will play a big role in the consistency of profit from their trades.
The Success rate of Day Trading
To be the other 5% of people who can make money by day trading, you have to understand the risks that may lead to that loss. Besides, you have to also avoid the assumption that day trading is easy.
The Need to Have a Robust Method
The lack of a solid trading strategy has been the primary reason why many traders fail day trading. Successful day traders do not only look at the asset price chart. They develop a robust strategy that they can use in every market situation.
More than that, their strategy can sometimes tell them when they should stay away from the market. These strategies prepare the traders to make the decision before a profitable opportunity appears.
The goal of a day trader’s strategy should be to reveal trends and patterns that can lead them into the opportunities to make a profit. Thus, there is a big need to do many types of research for it.
The Need to Spend Time Practicing
Many novice day traders do not realize that day trading takes a lot of time to learn. Researching the market only in a few hours will not help someone to become a successful day trader.
It is a super rare occasion that day traders can make money in her or his first-day trading. Commonly, day traders will not see profitable traders for at least the first six months.
The Need to Whim the Market
There are various things that can bring difficulties to gauge and navigate the market. As a day trader, you have to learn and understand the trigger to know better respond for every market situation.
One, you need to always put a stop loss to control your financial risk whenever you make a wrong guess about the trade direction. It functions like a threshold that mitigates your possible loss.
Two, always remember that you can’t always get your expected price within the market. High volume may push the price away from your target. Thus, you cannot accept less than the ideal price or skip what can still be a good price.
The last, market consists of many people trying to gain profit. Normally, people who have been good at trading will take profit for the trades placed by new traders.