How to become a successful Day Trader(5 Steps)

Step 1

They say 90% of the traders lose money in day trading and only 10% make it big, it’s for the reason, most of the traders start day trading with gambling mindset thinking it’s fast and easy money.

Trading should be treated as a business, you need to think and run it like as a business, like in any other business, your revenue should be more than your cost (like rent of your shop, salary to employees, raw material cost etc), same way in trading your profit( revenue) should be bigger than your losses(cost).

Remember, in trading, your only cost is your laptop and internet, you don’t have additional costs like paying rent, paying for raw material or paying salary to employees, so whenever your SL hits and you make a loss, accept it as a cost of doing business.

Traders who have realistic expectations and who treat trading as a business, not as a hobby or a get-rich-quick scheme are more likely to succeed in this business.

Step 2

Have a Robust Strategy

Have a back tested trading strategy, it need not to be very complex, even simple support /resistance strategy is good to start with, if you go to Google and search day trading strategies you can see thousands of strategies, select one, back test it(at least on 6 months to 1 year data), stick to it and master it.

For me, I am a big fan of pivot points, so my day trading strategy based on pivot points and price action.

The same way you can pick one strategy as your favourite and make it your own.

But, remember, it’s not the only strategy which makes one successful, risk management and trading psychology equally important in day trading.

Step 3

Be a student of the market.

If you want to become a full-time trader, it’s important that you take the time to read and do a lot of research, backtesting on your system or strategy; these are essential steps in your overall success as a trader.

When finally, I decided to become a full-time trader, my preparation went for almost 2 years before I took my first trade as a full-timer, so, in trading, be a student who is well prepared before taking his final examination.

You need to keep updating your knowledge; it should be the same as how you were preparing for your board exam, like sharpening your knowledge by doing a lot of studies and research.

Spend good time in backtesting your strategy, learn new every day through google, books, videos and whatever you get hands on.

One more way to learn newer things is by following experience traders on social networking sites like Twitter, Facebook and reading their blogs.

Step 4

Risk Management is ‘Holy Grail’ of trading

If there is only Holy Grail in the trading,then it is “Risk Management”

No trader survived in this business without a proper understanding of risk management.

Trading is a profession where you will get better and better with experience, and to get that experience you need to survive in day trading, and to survive you need to protect your capital, the only way to survive and protect your capital is trading with strict SL(Stop Loss)

You need to decide your SL even before punching you trade; it should be at a place where you think price won’t reach, also it should be based on the risk per trade.

In my case, I don’t punch any trade without SL, and my SL is 1% of my trading capital.

Some traders believe in keeping mental SL than system SL, don’t fall for that trap, it should be in the system not in your mind, once SL hit you are out of the trade, no questions asked.

There are many articles and books available emphasizing on Risk Management, read that even before taking your first trade.

Step 5

Trading psychology

Last part of 5 steps, Trading Psychology is most important when it comes to trading but most underrated and neglected by new traders.

Trading psychology which differentiates good trader from a bad trader; on this subject, you will get a lot of reading materials, Mark Douglas wrote an entire book on Trading Psychology,” Trading in the Zone” you can consider reading this book.

Trading psychology is all about controlling your emotions while trading, like, not over trading, not revenge trading, and more importantly not taking impulsive trades like FOMO (Fear of missing out)

Many people think that when they become day trader they have to keep trading entire day, it’s not true, in trading, unlike other professions, lesser the trade better it is, one needs to have the patience to wait for the right set up to occur, sometimes entire day there may not be any good set up, in that case don’t trade.

To become successful trader, one need to have arobust trading system but same time risk management and trading psychology also important.

CONCLUSION

If you are still thinking whether trading can be taken as a full-time profession? then my answer is YES, provided you have gained enough knowledge, have at least two years of savings as a backup, and ready to maintain strict trading discipline.

One need not to be from financial background to be successful in trading, I am from Biology background and worked in sales profession for many years, my educational background and work experience are totally different from financial market, but, still I could make it because of my passion for day trading, so, you can also make it if you are really passionate and hunger to succeed in this business.

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