Day-trading represents both a rush of adrenaline and potential goldmine for first-time investors; however, many newbie traders fall prey to rash decisions and unrealistic expectations which hold them back.
While there are stats thrown around stating that approximately 90% of day traders are losing money, the fact remains that there is proverbial gold in the hills of day trading for those with the right mindset. Oftentimes, successful trading is largely a mental game for those who actually hit it big.
Whether you’re a complete newbie to day trading or you’re just curious about getting started, consider the following absolute essentials before you invest a dime.
Set Up Your Battlestation
There’s a stereotypical image out there of your typical day-trader kicking back on the beach, sipping margaritas while making millions from the comfort of their laptop.
It’s time to wipe that image from your mind and start getting serious.
First and foremost, legitimate traders have their battlestations set up so that they can actually get down to business. You need to create a home office environment that fosters productivity.
For example, make sure you have a reliable computer and Internet connection so that you never miss a beat. Likewise, make sure your physical office is set up with shading solutions such as sheer vertical blinds and other amenities to keep you comfortable at all times. Don’t make the mistake of slacking with your workspace: the more you take your trading seriously, the more likely you are to see results.
Only Trade What You Can Afford to Lose
You’ve probably heard this advice before; however, the importance of starting small can’t be stressed enough.
Making money as a day trader requires some trial and error: there’s no two ways about it. More likely than not, you’re going to lose out a bit before you strike gold. By trading only what you can afford to lose, you don’t set yourself up for financial ruin. Similarly, you’ll feel more comfortable taking risks when you’ve accepted the fact that what you put in you may never see again.
This mentality isn’t fatalist: it’s realistic. After all, realistic expectations are crucial to becoming a long-term trader.
Do Your Homework
There’s a lot of white noise and fluff in the trading world. You should strive only to listen to investors whose advice is proven to pay returns; likewise, you should also take their advice with a grain of salt. There’s plenty of insight you can glean from successful investors, but that doesn’t mean you should expect to replicate their exact results.
In short, be wary of spammers and scammers trying to sell you on larger-than-life investments advice.
Don’t expect to become a millionaire overnight. Again, much of investing is about trial and error. Even if starting with a small amount of capital means smaller returns, you’ll thank yourself down the line for not trying to chase short-term success.
On a similar note, tread lightly when it comes to risk. Sure, sometimes you need to take a leap of faith; however, don’t put yourself in peril while doing so. If your gut feeling tells you that something is off about a deal, perhaps it’s best to listen to your instincts.
Becoming a day trading success story is easier said than done. That being said, applying the aforementioned principles will give you a realistic path to making money versus relying solely on dreaming.