One of the very few luxuries the market offers is ‘time’. If you buy a
stock today and it goes down tomorrow, you can still give it ‘time’ with
a hope that it will bounce back. However, when you day trade, the
luxury of time is taken away. Each day, the scores are settled. This
makes day trading a very tough profession, with a need to be highly
consistent and disciplined. Needless to say, if done right, it can be
highly rewarding. If you are getting started on day trading, there are a
few aspects that you need to bear in mind.
Set realistic expectations: Many traders live with a notion that they
can double their money every month. Even if they manage to do this, they
should attribute a large portion of the success to luck. The key to
successful day trading is being consistent. Tone down your expectations.
If you are generating 3-4 per cent return a month, you are doing a
phenomenal job.
Stop speculating, start trading: Trading requires you to design a
strategy. Every design has a valid reason behind it. If you cannot find
that, then you are blindly speculating, which is a sure recipe for
disaster. Typically, the valid reason should be a ‘trade signal’ from a
trading strategy. The strategy can be as simple as a price volume
breakout, moving average cross over or as complex as neural network
algorithm.
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