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5 Tips that Will Help you be in the 10%
To succeed in the financial markets as a day trader, one needs to have some qualities that make it easier to trade without losing too much money.
Education and online communities
When someone asks: why do most day traders lose money? The answer is usually: they were not ready to trade and took no steps to rectify that.
With the world as interconnected, as it is now, the last thing you should have trouble getting is information. We offer it, we recommend it and we ensure that traders who come across our material get the emphasis we place on it.The financial markets have allowed traders to come together and share the analyses that they come up with.
Learning with others enhances your chance of getting it right. Without the proper education, there is no chance of you making it to the big leagues in trading.
Trade like it is a real business
After all, you are investing money into it and are looking forward to getting returns on that. To be successful, you must treat this as a business and not as a part-time hobby. If approached as a hobby, you will most likely have no reason or motivation to learn more.It can start to get frustrating if you do not take it seriously, since good results only come about when people can come up with a plan that works, treat the investment like a business and work at it to make sure that it pays off and there is a return on investment.Trading comes with expenses, losses, taxes, stress, uncertainty, and risks. All these qualify it to be a business with the potential to earn you returns if you put in the work.
Go in with a strategy
As you learn how to trade the markets, you will find that strategies are everything. They can make or break a trader and constitute a business plan. Without a strategy, it is impossible to make returns and you will most certainly lose money on stock trading if you start without a plan.There is a lot of money management to be done for everything you buy and with today’s technology, it becomes easier to cross check and find out if your information will work. This is what we call backtesting.Using historical data, you can come up with a trading idea that works consistently. The more time you spend in the markets trading, the more you refine your idea/strategy; to make it yield returns more consistency.
Technology must be your friend
Your phone, PC, or tablet is your friend when trading. Good software is important and communication is paramount. If you use technology well, you can stay ahead of the curve, learn faster, gain information quicker, and stay ahead of the news and movements.With software, you can chart the trends and use a variety of ways to understand how the markets behave under different conditions, to avoid making expensive mistakes.
The technology we normally use for things like streaming and connecting with people can be repurposed to gain knowledge, meet other traders, access free lessons online to teach you how to trade stocks, and more. When looking at how many stock traders lose money, it becomes clear that they did not use tech to their advantage.
Be careful with your capital
Saving enough money to fund an account and start trading is not easy especially since stocks have higher capital requirements than forex or futures. You do not need an expert to tell you that you do not want to go through that gruelling process twice.So, how do you protect your capital?First, start by ensuring that you never entrust it to anyone you cannot verify. We are talking about brokers and other platforms that try to get newbies to invest money in things they should not.Risk management plays a big role in capital management and should be your priority, to ensure that your capital can serve you well and for longer.
The long and short of it
We think it needs repeating that 90% of day traders lose money and that statistic can be terrifying to a newbie.
Trading is difficult unless a person invests time and money into learning about the stocks, understanding how to trade, and using strategies that minimize risks, and prioritize analysis-based decisions.
With training and education, a person can enter the upper echelons of traders and be a part of the 10% that does it right.
To lose money on stock trading means that a person did not invest enough time to train. As with anything, knowing your material is important. Your analysis, which guides your strategy, is important in ensuring that you can generate consistent profits.
Ready to start your day trading education journey? Begin with our free introductory course by filling out the form below.