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Everyone’s heard about friends or friends of friends who’ve made a killing playing the market.
If you’re just starting out trading all the markets, jargon and high dollar sounds can be confusing and worrying. Thankfully, educating yourself about day trading has never been easier.
Here Are The Five Traits All Successful Day Traders Have To Have
#1. Strategic
Having a strategy is essential to success as a day trader. Before you ever make your first buy or sell you have to know exactly what you’re looking for and the actions you’ll take when you find it.
The first step is to decide what you intend to trade. When people hear trading they usually think of stocks, but the stock market is just one of many options available to successful day traders.
Some of the most popular markets include:
- Forex
- Futures Trading
- Stocks
- Options
Day trading options is especially popular among traders. It allows you to leverage borrowed stocks to achieve significantly larger gains than you could otherwise.
#2. Disciplined
Having the best strategy in the world means nothing if you lack the discipline to follow it.
Successful day traders set specific rules and always follow them.
Common rules include setting stop limits/stop losses. Stop limits and losses allow a trader to minimize their exposure to risk. If they purchase something at $20 they might set a stop limit at $19 or $18, thus cutting their losses.
Many traders also limit their gains. Once an investment reaches a target price they sell to lock in their gains. This prevents them from sitting on an investment too long and watching their increase slowly drain away.
#3. Decisive
If you can’t swiftly make decisions you can’t succeed as a day trader. The very nature of day trading means you will have to decide whether to buy or sell high-value financial instruments very quickly.
Disciplined day traders will watch out for any opportunity that meets the needs of their strategy. When they see it they strike immediately.
To succeed as a day trader, you have to make instantaneous decisions based on your own knowledge, goals and available resources. To do this, you have to have a decisive personality.
#4. Willing to Embrace Risk
There’s no denying it, day trading is inherently risky. If anyone ever tries to sell you a ‘risk-free’ investment opportunity, walk away immediately.
When buying any kind of investment there is always the chance that you will lose money. If you can’t ride the highs and the lows with equanimity you won’t succeed as a day trader.
#5. Successful Day Traders Are Committed
Day trading requires commitment. Commitment of time, energy, and financial resources.
Most day traders spend at least three to four hours a day pursuing their strategies. They need a minimum of several thousand dollars to even get their foot in the door at some markets.
If you only want to dabble in day trading, expect hardship.
Don’t Lose Heart
There are still plenty of opportunities available if you don’t fit the personality requirements to be a day trader.
Check out these useful tools and articles to learn more about other ways to make money online.
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