Without a doubt, the hardest thing about Day Trading is just getting through the personal learning curve before crashing and burning. A "learning curve“ is the time and effort required by an individual to acquire and become proficient in a new skill. Day trading is definitely a complex skill and is not easy. It requires a lot of work, dedication and continuous exposure to the market before you can develop the self-control necessary to be profitable on a regular basis.
Remember, most day traders go broke or quit within the first year.
The knowledge of day trading does not come overnight. You wouldn't expect to become a chess master after playing a few games with a friend. It might take a hundred matches for the complexity of the game to finally start to sink in and several hundred games to truly master the strategies. Day Trading is game of chess that you play with the market, only the stakes are higher, you are using money to play the game! There is a lot to Day Trading. You must master complex analysis & strategies that help you time your entries and exits and the mechanics of order placement. You must develop consistency, patience, self-control, and an analytical mind, so that you can learn and improve from your failed trades and mistakes in money management. You have to overcome boredom, laziness and sloppiness.
As you expose yourself to the day trading process day after day, week after week, you will develop a calmer mind and learn how to control the emotions of fear and greed which very often take control of our mind which react to the market in ways we normally wouldn't and in ways we know we shouldn't. Your first goal is to be able to play the game and NOT LOSE money. At the end of the week you want to have a profit or at the very least be at break-even. Once you achieve this level of trading proficiency you can
go onto strive for higher and higher profits in your trading. But it has to be done is a strict and controlled manner or it can quickly lead to disaster.
If you really want to become a profitable day trader and not just another trader that gets kicked by the market then you will have to adopt the following trading plan.
Get through the day trading learning curve without going broke first!
How This Plan Works
The plan is designed to walk you along in baby steps and protect you from the number one threat to your day trading career…yourself! Everyone should start at Beginning Day Trader Level 1. It doesn't matter if you have a 40,00,000 account to trade, you will still want to start out at square one and EARN your way, step by step to Expert Day Trader Status.
2 consecutive weeks reaching Min. Weekly Profit Target Advances you to the next level.
2 consecutive weeks with a net loss for the week, gets you Demoted back to the previous level.
Max Daily Position Size:
This is the maximum amount that you can have in 1 or more trades at the same time intra-day. For example, at Level 1, you can trade more than 10,000 cumulatively throughout the day over a series of trades but never more than 10,000 at any one given time. This max position size will keep your losses on any one trade that moves against you to minimum and easier to deal with.
Daily Loss Limit:
This is the maximum amount that you can lose during a given trading day. If you hit your Daily loss limit at any time during the day you MUST QUIT trading with real money. You can watch the market and paper-trade all you want, but no more live trading! If you lose your daily loss limit on one or several trades, then things are not going in your favor that day. The Daily loss level will keep you from turning into a “get even -vengeance trader” for the remainder of the day which can easily triple and quadruple your initial smaller losses adding insult to injury.
Minimum Weekly Target:
This is the minimum profit goal that you must achieve two weeks running to advance to the next level. It is a relatively conservative profit goal, as a good day trader could easily make the entire weekly target in a single trading day using the restrictions of the Max. Daily Position Size at that level. The idea is to get yourself finishing the week without big losses and with an acceptable profit -consistently before becoming more Aggressive.
Courtesy : www.swing-trading-club.com