So You Want to Day Trade?
Of course you do… what starry eyed young millennial wouldn’t love to sit around in their underwear all day…getting paid to click buttons?
The REAL question is – how do you learn to day trade?
There are countless financial tactics and strategies in existence, so where do you start? Where do you focus?
Let’s do a quick Google search on day trading. The search yields a whopping 1,010,000,000 results. Where do you begin?
The reality is that you will NEVER be able to sort through all of the nonsensical trading articles full of misinformation.
When I started out, I quickly realized: it’s better to learn one thing at a time. Why? Because it’s nearly impossible to learn everything. Now that I’m no longer enchanted by every shiny indicator, I’m able to produce some amazing results with strategies that actually bring home the bacon.
Just take a look at the screenshot below…
Building a small trading account is no easy task. Now fast forward just a few years and here is how I fared in cryptocurrencies with Bitmex…
YES – That’s right, I produced a return on investment of approximately 1000% in just under a month by simply day trading cryptocurrencies like Bitcoin. If you think that’s impressive, just look at what I did in 2015 after beginning to learn real financial trading knowledge…
Not many traders can say they’ve made over 1000% ROI on multiple occasions, much less in multiple markets…
As you can see from the screenshots above, I know my stuff. I do this better than almost anybody- rapid account building.
So let’s be realistic: day trading makes virtually no one rich. Why? Because most people never learn real useful knowledge to establish strict ground rules.
Basic Ground Rules for Day Trading
- Only trade with money that you can afford to lose. This is paramount because in the beginning, you’re almost certainly going to lose until you learn a strategic trading edge. This means you shouldn’t ever trade with rent money.
- Start small, trade small. Early on you’re going to lose. It’s important that you trade small so that you lose small, because you need to be around the next day to learn how to become profitable.
- Learn one thing at a time and master it. I already showed you how many search results “day trading” yielded, so why would you get in a hurry? It’s impossible to learn everything. Instead focus on learning one strategy or concept at a time. Gain mastery, and move on to the next.
What to Trade
To begin your journey, you’ll need to first decide on what financial market you’re going to buy and sell. Those markets could include, Forex, Cryptocurrencies, Futures, Stocks, Bonds, Commodities, or something else.
- Avoid excessive volatility- at first. A trader needs volatility to make gains, but too much means it’s easier to wipe out those precious profits.
- Keep an eye out for financial products with good liquidity and volume. High liquidity and volume means they are traded often and will be easy to enter and exit positions. Forex is the most liquid market where trillions are exchanged daily.
- Familiar products. Pick a few securities to trade and stick with them for a while. This also means, follow the same strategy long enough to actually know if it’s profitable and has some edge.
Whatever you decide to trade, as a day trader, you’re more than likely going to heavily use some form of technical analysis.
Avoiding catastrophic loss is the primary focus of a day trader. The only way to do this is to manage smaller risk and cut losing trades quickly. Risk management is all about minimizing the potential drawdown, or the amount of money lost on a single trade. Consider the following:
- Position sizing. If you’re trade is wrong, how much will you lose
- Portfolio percentage. How much of your total account are you willing to lose?
- Exiting. If you’ve made a profitable trade, when do you get out to lock in profit
- Losses. How big and how many are you willing to take before you throw in the towel for the trading session/week?
No matter how good your strategy is, some trades will never go your way. It’s important to have a plan to avoid losing everything. Proper risk management prevents small loses from becoming large, and preserves capital for the future.
Easing into Day Trading
There’s no reason to even start with real money anymore. Almost every broker offers some form of paper trading that allows you to practice trading and practice using their trading platforms. Paper trading involves simulated trades that allow you to see how everything works. Pick an arbitrary number of 20 or more trades in a row must be profitable before graduating from paper trading to real money trading.
Prove to yourself that you can be profitable first.
Keep in mind, there is no substitute for real-life trading, so the goal is to graduate from paper trading sooner than later.
- Establish a strategy before you start. Losing money makes people fearful, and fear often induces bad habits. Having a plan before entering a trade helps you avoid making emotional decisions rather than rational.
- Be patient. Look for opportunities that meet your trading criteria. If the situation doesn’t meet your requirements, don’t trade. It’s always better to not be in a position rather than be in a losing position.
- Study, study, study. Keep practicing. Keep improving. This means you’re going to have to continually keep studying to get better, no matter how good you’ve gotten.
I’ve spent nearly 10 years honing my craft, but even after learning some serious skills, I never neglect the basics…
Sure, I’m not saying that I’m the best trader ever, but I know enough to know when I’m confident in a trade. Look at this Bitcoin trade I took.
The blue line at around 9580 was the price level that I was willing to risk…with a target of 7225, denoted by the “interested in this”
If you think about this trade, Bitcoin fell over 2000 points over the course of a week or two…
What’s more impressive is that I…predicted it with PINPOINT accuracy…
I don’t mind showing you what’s possible, because day trading can be ridiculously lucrative if you know what you’re doing.
Just as easily…it can be extremely costly if you don’t know what you’re doing.
ONE THING that I’ve mastered is trend following or chart reading for virtually any financial instrument. What if I told you that the Bitcoin trade you saw above made over 1000% and some of my students made even more than that?
So the real question…is day trading something you seriously want to learn, or is it just another pipe dream? Just recently the Dow Jones had its largest daily gain ever. Based on everything that I’ve learned, I managed to take a long entry just before going to bed, as I expected the market to bounce.
This is what I woke up to…
There’s nothing like waking up in the morning, logging into your stock market trading account and finding $5000 waiting for you.
Learning to day trade does not come easy, and it’s not for everyone. The takeaway? People are still looking for way to get rich quick, and trading is just not one of them. Trading requires discipline and perseverance. If you can manage to learn enough before you give up or lose enough that makes you feel as if you should give up, you’ll have a fighting chance Knowledge is truly power.
Like I said… I don’t claim to be the best trader in the world. Far from it actually. But I do want you to learn what I know… I’m determined to help people get through what I call the dark years – those first few years when I wanted to quit. If you’re constantly losing money, you need to make some changes before it’s too late.