is important to not simply follow through with it anyway. You must have the
patience to disregard it and then wait for something better to come along. If you
decide to chase the specter of potential profit by changing your predetermined
exit and entry points on the fly they all you are going to do is ensure that your
plan isn’t as effective as it might otherwise be. After this has happened they you
lose in the long-term regardless of the outcome of the individual trade as if it
works out then you are promoting bad habits that are sure to do more harm than
good in the long run.
Faith:
Having faith in your trading plan is crucial when the rubber hits the road
and you are staring down a potentially profitable trade. After all, no trading plan
is perfect and you are likely to see your plan fail to execute as planned a full 40
percent of the time. As such, you need to believe that the plan you have created
is solid,
and follow it through exactly, every single time you make a trade,
otherwise you are throwing off your odds of success even more. A good plan
gives you an edge over the randomness inherent in the market, if you disregard
your plan constantly then you are doing little more than gambling and there are
always going to be easier ways to gamble than via day trading. Having faith in
your system, assuming it is worth believing in,
will always lead to greater
overall profits.
Objectivity:
When trading, especially early on, it can be easy to start to feel a
connection to individual stocks. This is a surefire way to lose out, however, as
any stock could change directions at any time
and you need to be objective
enough to know when your time with a given stock is coming to a close. Not
keeping an objective mindset can easily cause you to start making harmful
mistakes such as doubling down on losing stocks in an effort to recoup your
losses or sticking with a specific stock after all indicators point to a long trend
moving away from your desired direction in hopes that things will turn around.
The same thing can be said when it comes to listening to outside sources.
Once you have committed yourself to a specific stock
it is important to ignore
everything besides your trading plan and consider it white noise until the trade is
completed. Each trade needs to be objectively verified based on its merits in
relation to your trading plan, if you do this then you can let the results take care
of themselves.
Don’t expect too much:
Having the wrong expectations is one of the easiest
ways to lose out when it comes to day trading. It is important to believe in both
yourself and your plan, but this belief should always be based firmly in reality.
Having an unrealistic expectation when it comes to profits is a good way to let
your emotions into the trading process which can then easily lead to trading
mistakes that you wouldn’t have made if your head was clear.
Keeping your
expectations realistically in check means having a firm idea of the potential risk
and reward that will come along with every trade. It is important to keep in mind
that short term trades are more likely to lead to safe but small returns and that
long-term trades have a greater margin for error but balance that out with overall
greater gains.
Motivation:
In order to remain true to yourself regardless of the situation you
find yourself in, it is important to understand
the motivations you have for
trading and how they affect your trading style. It is also important to understand
the motivations that inspire the various commodity markets if you want to trade
in them successfully.
In order to figure out what motivations are influencing your favorite commodity,
the first thing you will need to do is to consider who the major players are in that
commodity. Once you know who the major players are you can watch how they
trade and determine the reasons behind why they make the trades they do. After
you understand how they are likely to move then you can take a look at how
things are currently progressing and compare that to the historical data you have
gathered. When taken as a whole, this process makes it easier to determine how
the major player movement affects the market as a whole which makes it much
easier to predict future movements in turn.
Taking action:
Keeping everything that is required in mind at all times is a
challenge, even for experienced traders. If you never put what you have learned
into action, however, then you will never improve as a day trader and, what’s
more, you will never profit from it. Once you
have made a decision it is
important to understand why you made the decision you did and also not to be
afraid to bail on a trade that suddenly turns around on you. It is important to
keep in mind that a small loss in the present is always preferable to a potentially
large loss somewhere down the line. Furthermore, you will want to keep in mind
that there are absolutely days that the market isn’t going to be doing much of
anything. When this happens, it is perfectly acceptable
to simply sit back and
wait for more profitable market movement. Other times, something unexpected
is going to happen and skew the market in an unexpected direction for a
prolonged period of time. Remember, just because you are a day trader doesn’t
mean you need to be trading every single second of every day.
