Day trading is the white-knuckler of the speculating world. It’s fast and furious and the rewards or consequences are nearly immediate. For every trader there comes a time when they just can’t resist the temptation of jumping in and out of the market to try and catch some lightning quick roller-coaster profits. If you’ve already worn out that impulse, good for you. If not, I suggest you go ahead and get your hands dirty. You’ll never be over the curiosity until you’ve dug in and given it a try… at least just a little. Allow me to offer this brief day trading guide.
First of all, if you’re interested in trying your hand at day trading, don’t bother to paper trade. I know I’ll get flamed for saying that, but I’m serious. The truth is day trading is 90% emotional control at least, and perhaps more. You can have all the knowledge and great strategies in the world, but when the market starts to hum and you have to make split-second decisions, you’ll quickly find that you must live or die by your wits. You need to first determine if you have the emotional makeup for the fast lane, and you can’t do that without risking real money.
The funny (and very fortunate) thing is that you don’t need to use much money at all. Try this: Get yourself an account that allows you to trade .01 standard lot increments (equivalent to .1 mini lots). Then set a daily budget of just $10. You will try to gain $10 before you lose $10. When you’re up $10, you quit – when you’re down $10, you quit. You trade only .01 to .05 lots at a time (that’s 10 to 50 cents per pip). It’s a pittance, I know, but you’ll be absolutely astonished at how strong the emotions will be even with just that tiny amount of pocket change. You’ll win $1.50 and you’ll feel like Warren Buffet… then you’ll lose $1.75 and you’ll feel like crawling under the desk. It’s perfectly normal, and it just goes to show how powerful the emotions of day trading can be. Until you are able to master those emotions, they will be a constant source of trouble for you.
So, keep up the $10 (plus or minus) a day ritual until it bores you, which is a great sign that you’ve managed to numb the emotions somewhat. Then kick it up to $20 a day or even $50. Then $100. Then??? If you keep going that way one of two things will happen. Most likely you’ll wear yourself out from the emotional bull ride and decide to take your trading elsewhere, like a nice peaceful trend following system. OR, you’ll do well enough and become jaded enough to the emotions that you’ll start to feel a sense of confidence – even power about your dealings with the market. You’ll develop a sense of the flow of market action and you’ll find yourself making trades almost instinctively – and winning! If you’re in the small minority who reach this elite plateau, congratulations! You have the rare makings of a true Day Trader!
