10 Things to watch out for when starting to investigate the business of day trading:
1 - Indicator vendors who do not trade their own indicators.
2 - System developers who do not trade their own systems.
3 - Indicator vendors who do not teach how to trade with their indicators.
3 - System developers who do not teach how to properly use their systems.
4 - vendors who record market replay results of indicators or systems without any real time trading results or videos.
5 - "Secret" indicators or market knowledge known only by the vendor.
6 - Trade education rooms where you cannot see the trades either on the chart, dom, or in full clear view.
7 - Trade education rooms where you cannot see a track record of trades taken with accurate time stamps on each trade.
8 - Trade education rooms where the trades are not called in advance enough for you to take advantage of them.
9 - Hard sell trade rooms, email bombardment.
10 - Sales rooms disguised as trade education rooms.
10 Misconceptions about day trading that many traders believe;
1 - Trading is a hobby, and you can make money with this hobby.
2 - All trading indicators and methods should be free.
3 - Some indicators are better than others.
4 - Some systems are better than others.
5 - Only the "best" indicators can make you money.
6 - Indicators make you money.
7 - Anyone can succeed at day trading.
9 - Mechanical systems are best.
10 - The results the trade room moderator gets are what you will get too.
10 Truths about Day trading
1 - Trading is a serious business.
2 - The market has no mercy.
3 - For every trade there is a winner and a loser, and there are real people trading.
4 - Institutions and locals inititate market movement.
5 - Most retail traders loose money consistently.
6 - No one knows the future of where price will go.
7 - Trading is all about statistical probabilities of patterns and events repeating.
8 - Statistical probability is very short lived...often just 1 price bar.
9 - The results you get trading in a trade room have very little to do with the results a trade room moderator gets.
10 - Trading is not for everyone.
There are many more, but these are the ones I consider most important for the new trader.
The following 25 users say Thank You to Jaguar52 for this post:
An important thing i think for a newbie is to realize that you need to take the time to understand how the markets work. Everything else is a support tool. Don't think it's as easy as finding a few indictors to do the work for you. If you build a good foundation, it will show in the rest of your trading
The following user says Thank You to Bids for this post:
There are many ways to learn something. You could read a book, take a structured course, watch and imitate, trail and error, and others if you care to spend some time thinking about it.
When it comes to learning, repetition combined with application leading to a structured qualifier (test) often is the best way to actually know that you have learned the material.
With trading there is a tremendous mental aspect to your daily activity that cannot really be taught without the accumulation of active live experience performing the trading activity. This means after you have studied your strategy and the related technical considerations for taking your trade entry and exits, the additional thought processes that combine with this are your personality, desires, expectations, hope, fears and the entire spectrum of your emotional makeup. This will now increase your learning experience to push it from the theoretical and technical into the realm of a defined personal reality. It can be pretty scary at first. Most traders do not get past this level, and are unable to combine their measurable technical proficiency with their controlled emotional responses and are thus doomed to travel the eternal roller coaster or travel on the path in search of the holy answer. One big reason why they cannot get past this level is because the ending result of the learning combination produces negative results from their trading. This may be the result of a low probability strategy combined with too low of a risk reward strategy or entries that are ill timed, or a combination of all these. Add the additional emotional processes to this and you have a great recipe for disaster.
If we go backwards and examine each part separately, the strategies with defined trade entries and exits, and the trade and self management while trading we will probably see an incongruity. Having a clear trading plan that covers our entire spectrum of activity while trading can go a great way to help us pinpoint the problems.
The main question is what does it mean to learn and just how do you really learn to trade well enough to be able to confidently continue in the face of flying bullets on the battlefield? First and foremost remembering that trading is a probabilities game and that your personal input into the market is inconsequential to anyone except the unknown trader on the other side of your trade, helps put things into perspective.
So the first thing that comes to mind is that worrying about whether your strategy based trade entry will work this time is pointless and a futile waste of energy. If your strategy is based on soundly tested statistical result backwards and forwards, and your entries and exits have the proper risk reward with the probable expected outcome of your strategy then wondering if this trade will fall into the 70% win side or the 30% loss side is ridiculous. Yet I have seen many a trader go into each trade expecting it to fail.
Even more curious is I have seen traders go into a trade and due to not following their accepted (pre-defined) risk according to plan turn a winner into a loser because they wanted to limit the failure to less of a cost. Then they watch it come to within 2 ticks of their original stop and go on its merry very profitable way while they stand there holding their 8 tick loss when their stop was originally 10 ticks...but since this was sure to be the loser, they are left holding the empty bag. One big reason for this recurring behavior is that they lacked a sure reason that could tell them the trade had failed. With all the price gyrations and without a clear price based exit criteria, they may have stayed in the trade only as long as their nerves held out, rather than for some technical reason. There have been times when I have entered a trade and price performed a clear exit pattern, and I was able to confidently exit my trade with a 2 or 4 tick loss avoiding the full stop. There have been other times when the price action and pattern was muddled and unclear and so I stayed in the trade since no exit criteria was met and took the full stop out. When using my automated strategies, there was no consideration on the exit on my part. I had to rely on the expected outcome dictated by the automated strategy. All this is according to plan.
When we decide to learn to trade, we have a few choices as to how to actually go about doing that. None is better than the other and we will learn according to what we are able to understand and accept. For some people the trial and error method sits better with them. Maybe they have deep pockets or big egos, or strong independent streaks, or just cannot trust anyone or have all the time in the world.
For others a clearly defined educational course is required. To get from a to b x amount of things must be mastered. Measuring mastery is sometimes a tough thing. If you take this approach make sure you have some qualifier.
Others need a defined structured trading course combined with hands on guidance, a final qualifier and someone to hold them to task along the way.
Still others need all of the above and in a safe environment with milestones measured by statistical achievement, continual constructive input and analysis from a third party guide, some pushing and prodding, and someone who they can always bounce their learning experience off of in real time.
Unfortunately getting all you need to be able to actually learn to trade consistently first, then confidently, then finally successfully is really tough in this business. Most of us want to hear what we want, not what we need. Many of us think if we pay enough then that means it will work. Many think you can just buy it and so the best is the one that costs the most.
Many of us think that it should all be for free and all traders are obligated to help each other win. Think about that. If I am to win, then who will need to take the other side of my trade when I do?
I am reminded of my family. The family will always tell you what you need to hear about yourself, while everyone else will usually tell you what you want to hear or don't want to hear, not what you need to hear. Family can really be a pain in the butt, but you gotta love them because they will be the best mirror you will find.
Learning to trade means first deciding what you want to learn, then how you are best able to learn that. If you tell someone you want to learn how to make $1000 a day, then be prepared to start at $100 a day (or less!). One of the things I try to emphasize is to learn to do well what you can do now first. If you have a strategy in mind, then learn how to make that strategy work until you get to the point where it either does or does not work. Keep tweaking it until you are able to work it to consistency and profitability. This can take time and money. In the end it may never work for you.
If you are starting from total scratch, have no great ideas or any real confidence that you can develop a profitable strategy within a reasonable amount of time, then look for some predefined strategy that makes the most sense to you and that you can understand. But more importantly, keep in mind that most reasonably reliable strategies of 50% (or even less) with the proper risk-reward and trade management can work and does work for the person who designed it and knows how to properly trade it.
Good teachers will teach you their method and help you learn your own. The best teachers will first plant their voice in your head, and then show you how to turn that voice into your own. Good teachers are like mirrors. They were just like you. When I taught martial arts, everyone started as a white belt. Only a few made it to black, and even fewer to the higher levels of black belt.
Learning to trade for many comes down to learning how to trade like someone else until you can learn to trade like you. The first part is actually the hardest. Once you learn it, you are left with nothing to do but improve on it and become a better trader.
The following 20 users say Thank You to Jaguar52 for this post:
I know a lot of retired executives with large retirement accounts who have decided they will rise to the top of day trading just like they did in their previous life in a large corporation.
They spend a fortune on a trading room in their home and spend another fortune to be mentored by some self proclaimed guru. They buy tons of software and indicators and proceed to slowly bleed red ink.
When things don't go well, they buy new indicators, sign up for new trading rooms, change brokers, change trading instruments and ...ready for this... decide that they're just not trading a large enough number of contracts.
Not everyone is cut out to be a trader. Good traders can't be manufactured, no matter how much money you spend building the factory.
Sorry for the rant, but it bothers me to see people piss away their hard earned money . No, it's not my money and they are adults ... but it still bothers me.
Good Trading and Good day!
I'm just a simple man trading a simple plan.
My daddy always said, "Every day above ground is a good day!"
The following 4 users say Thank You to ThatManFromTexas for this post:
This is how I started and then just as I am learning the strategy they went changed to a new strategy. But the fundamentals still remained the same and I am finally able to start putting my own plan together.