Day trading is an extremely tough business; you need to know how to make profits while your own money is at risk and while competing with the best minds in the world. Just like you, everybody is trying to predict the next move. When you win, day trading is the best business ever, but when you lose, it can make you freak out. You live in this scenario because you are dealing with a market full of future movements you cannot predict.
But over time, once you accumulate experience, you realize a few things about trading that can make your life easier and set your mind at ease:
1. The human brain cannot predict the future.
However, you can always seek to increase the odds in your favor by ‘building fences’, such as not trading before and during the release of economic events, or waiting for markets to settle in times of high volatility.
2. Hope is not a strategy.
Leaving things up to fate is something that only works in soap operas. If hope is the only thing you are relying on, you didn’t really analyze all the possible outcomes of a decision you’ve taken.
3. Use uncertainty as a strategy.
Uncertainty is an opportunity to research under pressure, which helps you to learn about the markets. You see both the positive and negative sides of your position. This makes you a sharper and more clever trader. Thus, uncertainty helps inform your strategy.
4. Balance the risks.
If you take risks that are too big (or too little) you should prepare yourself for the inevitable outcome: Losses. You either lose an opportunity to earn more by not making significant moves or you simply lose everything all at once. The important thing here is being able to pick up the right balance of risk – not too much and not too little.
5. Say “no.”
If an open position is not working out, cut your losses. After all, this is not a game made for endless winning. Rather, this is a game of small wins that will help you to gradually move forward .
It is up to you to apply these lessons to your daily trading. You can take this as a way to have less stress as you gamble on the markets. OR you can use these lessons and develop a strong strategy of your own to become a successful trader.
Traders need to keep in mind that the only way to overcome the issues presented above is by continually gathering more and more useful economic information through research, trustworthy websites, and blogs. This will enhance their decision-making ability and greatly increase their chances of outperforming the market.
The key to winning in the markets is to develop your own methodology, so when the trading time comes, you will be prepared. You must consistently follow your own personal process to be sure you addressed every likely scenario the market will throw at you. Relying on a well-informed methodology ensures that you are ready for regular market days, and days when significant macroeconomic events occur.