Preparing Yourself For Day Trading Is A Good Way To Overcome Trader’s Fear
Your biggest enemy as an incipient Day Trader how to day trade is Fear. You will probably never entirely get over it, but you can reduce it by becoming aware of several factors that contribute to what I call “Trader’s Fear”. You need to consider these “Trader’s Fear” factors before you launch into Day Trading :
Fear Factor Number One: Being Uncomfortable With The Market.
If you want to make as much money possible as a Day Trader learn day trading, you need to squarely face a few issues, including the actual comfort you personally have with trading in the Stock Market. If you are terrified of making a mistake, that fear will paralyze you and cause you to make the same mistakes over and over, for example pulling out when you should stay, trading prematurely (or long after the Indicators signaled you should have entered a trade) — just to name a few. If you are scared the entire time you are in a trade, you won’t be able to move past the problems that will dog you, and you won’t be able to “pull yourself together” when you absolutely need to.
Fear Factor Number Two: Going Cheap on A Broker.
Choose an experienced broker. It’s tempting to go with a broker that charges a low commission, but many times these individuals have little or no experience and they won’t be effective in recommending stock or helping you foresee unexpected problems. In my own case, as an example, I went with a broker who was “new to the game”, having just entered Stock Market brokering from a career in High Tech. He recommended some high risk Biotech companies that lost most of the money I invested. You need to go with an experienced broker, not a cheap one.
Fear Factor Number Three: Not Enough Practice Trading.
Spend time in the practice account before turning to real transactions. Don’t rush into “live trading” until you have spent a great deal of time practicing with the broker’s “funny money”. Practice accounts have an upside and a downside. On the one hand they help you see the impact of changes in the market on your profits and losses. You can make a few risky decisions in the knowledge that you are not really risking your own, real money. The downside is that you make risky decisions that you won’t make with your own money, and practice trading won’t really reflect what you do when you trade in a “live” account. The “Trader’s Fear” factor isn’t with the demo account the way it will be when you convert over to a “live” account — and that can mean all the difference in the world. Still, you can determine your most comfortable investing style with a practice account, which will be helpful.
Fear Factor Number Four: Not Knowing Enough About The Companies You Are Investing In.
Once again, had I known that Biotech stock was as risky as it was, I wouldn’t have touched it. Do your homework. Find out exactly who owns the company, how it is doing financially, what economic factors may influence it, and what Market Gurus are saying about it. Find good sources what is day trading of information and read as much as you can before you “place your bet”. Check out financial reports you can purchase online. This information will always lag behind events, however, so find sources that are as “real time” as possible.
Fear Factor Number Five: Launching Too Soon.
Take your time getting started. As long as you feel like you are leaping off a cliff, the anxiety will be much higher. Take your time with research, with dummy trading, with getting to know the Market in general. Read what advisers and market gurus have to say about how to trade with confidence. If you are careful about how you get started, things are going to go much smoother and you will have fewer problems. Never just dash into the process and hope for the best; prepare yourself as best you can, but also keep in mind that at some point in time you have to actually start. You can’t let fear keep you from doing THAT, either.
Fear Factor Number Six: Failure To Learn To Live With Risk
Day Trading is living with risk. Get used to it. Learn to love it and thrive on it. At the same time, learn how to reduce it. Learn how much money you can risk in a trade, and prepare yourself to lose it all. This means you don’t mortgage your house, or bet your retirement. Never risk more than you can lose, and be prepared to lose it.
Reducing fear as a Day Trader requires that you have a basic foundation in the Market: the manner in which it operates, how it is going to influence your trades, and how to make a profit. Avoiding the market until you decide to start Day Trading might make you anxious and nervous while you figure out what your best approach will be, but taking the time to reduce these “Trader’s Fear” factors is vital.
Above all, don’t rush it. Take your time to make sound investment decisions and ensure that you are on your way toward ultimate success. Some people can do this in a short period of time, but don’t let that stampede you. There is no set time for you to become comfortable with the market — and become a successful Day Trader.