20+ Day Trading Tips: How to Become a Successful Trader!

best day trading tips

Trading is a Business. When you are a full-time trader, the fact is that you are actually an entrepreneur.

You have possibly seen high-flying hedge fund managers like Dan Loeb. They run their billion-dollar hedge funds as businesses.

Well, this is the only difference between you and them.

Possibly, your account has less than one million dollars. However, you need to realize that these fund managers don’t trade their own money. They invest for the big pension funds and sovereign funds.

To some extent, you are better than them because you are not under pressure to perform. To start a successful trading business, they had to create their business plan and present it to their client. They also do everything that ordinary entrepreneurs do.

There are a few things that you can do to help yourself to become a better trader. This article highlights some of these day trading tips and tweaks.

How to be a successful day trader

Every person who enters the financial market hopes to become successful. At Real Trading, we have interacted with thousands of traders in the past two decades. While most of our traders are highly successful ones, some, unfortunately, have not succeeded.

In a nutshell, being a successful trader involves a combination of a few things such as expertise, having a good strategy, risk management, and being highly disciplined

Anyone who has this combination of these skills will always become a successful day trader. In the next part of this article, we will look at some of the most important strategies for becoming an excellent day trader.

Full-Time or Part-time?

Many day traders already have lots of market experience when they begin their new business ventures. Because it can cause you to lose a great deal of money very quickly, you may have to choose whether to work full-time at the venture.

That can allow you to watch the market continuously and make trades at the perfect times.

If you prefer to be a part-time day trader, make sure you have enough money to make up for your losses.

It is possible to succeed as a full-time or a part-time trader. We have seen people with day jobs who have created and mastered their trading approaches. Some of these people use their phones to execute trades while still at work. Others, on the other hand, use extended hours to day trade and make money in the market.

Must-have for both approaches

There are several strategies for being a full-time trader. First, ensure that you have a good and well-tested strategy in the market. Second, always use good risk management strategies to limit your losses. Third, be a disciplined trader. And finally, ensure that you have some savings to last you for a few months.

Some tips for being a part-time trader are: always give your job 100% attention, come up with a routine that works for you, and always have a good strategy.

Love what you do

To be successful in anything, you first need to love it. As a trader, you need to love and be passionate about the financial market.

This is because trading involves a lot of ups and downs. You will make money, but at times you will also lose it. Remember, no successful trader has had a straight path ever.

In 2014, Steve Cohen was forced by the SEC to shut down his hedge fund and pay a $1.8 billion fine. He closed it and within days, he converted his company to a family office. He did this because he could not imagine living a day without trading.

Let’s take a more trivial example. To be good at cooking, we would make more attempts, hold out, and swallow a few bitter pillows (in every meaning!). But if we set ourselves that goal, which was not a fading passion, we will come back to try what we failed at.

Likewise, you need to love trading and be very passionate about it. This brings us to the first step.

Educate and Discipline yourself

When you take trading as a business, chances are high that you will become a better trader. This is because having the entrepreneur’s mindset will help you take trading more seriously. It will remove the perception that trading is a hobby.

When you are running a business, you take it so seriously because it is your bread and butter. Making a small mistake can take your business south. Remember: a simple mistake can cost you your entire funds.

So, to be successful, you must learn how to quickly recognize trends.

Before investing your money, study as much as possible, and profit from simulating or virtual trading platforms.

In this part, you should have clear goals about what you want to achieve. We always recommend setting goals using the SMART approach. A SMART goal is specific, measurable, achievable, relevant, and time-bound. A goal that lacks one of these attributes is just a dream.

More Discipline

Among the most important skills, you need to have the highest level of discipline. This means that you should have a set of principles that you follow on a daily basis.

Research has shown that successful entrepreneurs rank discipline as the most important thing in their business.

For instance, they:

  • Open their businesses every day early in the morning without anyone telling them
  • Fire employees who are not productive.
  • Keep their earnings safe without spending it
  • Record their income and balance sheet consistently.

This discipline enables them to remain in business for a long period of time. As a trader, this is what you need to do.

Although day trading can be a fun way to make a living, make sure to put the work in to ensure that you increase your chances of meeting your potential in this field.

If you are not disciplined, you will not be a trader for a long period of time.

The Big Picture

Since day trading can be somewhat unpredictable in the short term, it is important to always keep the big picture in mind.

You may lose money even if you made a brilliant decision, or you may even earn money when you decided to do something that should have backfired.

However, the best day traders always have the big picture in mind, and it is vital for you to do so as well. Do not let bad results affect the decisions that you will make in the coming hours and days.

Another Tip: successful day traders must act quickly while trends remain active. You may lose money by waiting because the trend may not be favorable later.

Be ready to learn

To succeed in trading, you need to always be ready to learn. This is an essential rule that has helped almost every trader.

You need to read books (there are for traders of all levels) about other traders and investors. The benefit of this is that it opens you to the world of ideas.

You also need to read content from credible institutions like Economist, Bloomberg, and Financial Time.

The essence of doing this is that reading exposes you to the failures and successes of other traders. You can learn from other people’s mistakes and build up on their successes.

Reflection

Another thing that will help you is taking time to reflect. Remember that your mindset determines how successful you will be as a trader. This is commonly ignored by many traders, because they don’t realize the value that it brings to them in the short term.

Also, your trading days will not be the same. You will make profits and losses on a daily basis. Therefore, it is important to take time and reflect on it.

Doing this will help you make corrective measures if you made mistakes during the day, and will help you avoid making the same mistakes again.

Psychology

One of the most important things that will help you become a better trader is your psychology. This is a wide section that we can categorize into several smaller parts.

First, always know how to control fear and greed in trading. Some examples of greed that you should aim to avoid are:

  • Using too much leverage
  • Executing big trades
  • Overtrading
  • Holding onto a profitable trade for so long

You should also avoid fear in the market by avoiding trading and not being a risk taker.

Further, you should develop a good mental discipline that takes losses and profits well. A common mistake among traders is where they make irrational decisions when they make a big loss or a big profit. 

There are other ways that will help to boost your psychological state. For example, take regular breaks within a session, improve your work-life balance, talk to a good mentor, and read books.

Your health and wellbeing

Most importantly, you should always take care of your health and well-being. While we cannot control our health, there are some things that can help us improve the situation. 

Some of the things to consider are doing enough exercise, eating a balanced diet, and drinking water. In most cases, you will be more profitable when your health is in good shape.

Some Useful Strategies

Have your own idea

It may seem trivial, but the first way to be a disciplined trader is having a trading strategy that you are comfortable with.

There are hundreds of strategies you can use to become a successful trader. Actually, you don’t have to stick to the strategies that exist presently. You can develop and master your own strategy.

Doing this should take some time because of the back testing that is very necessary.

Be Selective

You will be presented with a tremendous number of opportunities every day, and it is essential that you are selective in regards to which ones you act upon.

Focus on the opportunities that you believe have the most potential and the least amount of risk, and pass on those that appear to be a bit more risky and see which trade wins.

Trading plan

This is essentially the union of the previous two points. A trading plan can either be manual or automated.

We suggest using a manual one that incorporates a number of technical and fundamental indicators.

With the plan, you can know the times to be involved with trading and the times to keep off. In addition, you can determine the right lot size for certain types of markets.

Time of Trading

The benefit of being a trader is that you can trade any time of the day for five days a week. However, to be a successful trader, you need to have a specific time of trading.

This could be in your morning hours, afternoon or evening hours. Most traders prefer trading during the market open or during the intersection periods. This is because this is the period when most trading happens.

You should stick to the time you have found success in. Doing this will help you to be consistent and understand the cycles a market takes.

When to enter and Exit a Trade

Have a Watchlist

A watchlist is a simple list of companies, bonds, ETFs, currencies, and commodities that you will be looking at. This is one of the most common day trading tweaks.

As you already know, there are thousands of items you can trade on in the market. You can buy and sell thousands of shares or trade in the hundreds of ETFs. You can also trade tens of commodities.

However, unless you are a genius, it is not possible for you to trade or follow all these items. Even the best traders do not always follow what different companies are doing. In their place, they use a watchlist.

A watchlist tracks only the items that a trader wants to follow. There are many ways of creating a watchlist. For instance, you can create one using the free Bloomberg or Reuters apps. You can also create a watchlist using Yahoo Finance or the hundreds of finance websites that allow this.

The benefit of having a good watchlist is that it enables you to keep track of the movements of the assets. Also, it enables you to receive breaking news about the companies that you track.

Our partners (TraderTv) offer a very interesting one, sent twice a day.

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Records Will Give you More Details: have a journal

One success factor in trading business is record-keeping. Entrepreneurs constantly record their sales, expenses, cashflow, and their financial position. Doing this enables them to measure their performance over years.

For instance, they compare their first quarter profits this year with their performance in the previous year. Doing this enables them to see whether their business is growing, stagnant, or declining. If it is declining, they take measures to improve.

As a trader, taking records will help you evaluate your performance over time.

Many traders assume that they can remember the details without recording them. However, as you trade more years, you will see that you can’t always remember the information. It will also give you more details about your income so that you can take care of the taxes in the best way.

One Example. Warren Buffet – who has been an investor for more than 60 years – has always used a piece of paper to note these details.

If he does this, who are you not to do it?

Why you need a day trading journal

Accept Mistakes. You can Learn from them!

At times, you will do your research and come up with a good thesis. Then, you will initiate a trade and hope that your thesis will be proven right.

At times, you will be right on this one. However, on other occasions, you will make mistakes or your thesis will not be proven right.

Well, to become a successful trader you need to accept that you are human and all humans make mistakes. Even the most successful investors have occasionally made significant mistakes!

Think about Warren Buffet (again), Steve Cohen, Dan Loeb, and David Einhorn. They all made mistakes that have cost them billions. Therefore, when you make mistakes, you are in good company.

And remember: You learn more from losses rather than from successes. Therefore, embrace failure as an important path towards success.

› How to Start Again After a Big Loss

Manage Risks

In trading, you can make a lot of money by taking huge risks. However, you can also lose a lot of money by doing this.

To become a better trader, you need to put measures in place to manage your risks. One way of doing this is by opening small trades that don’t expose your account to much risk, in many cases not more than 2%.

This means that if you have a $1000 account, all trades that you open should be aimed at making a maximum loss of $20.

This could seem to be a low profit, but when you do this for a long time, the profits and the long-term viability of your trading will be evident.

In short, without proper risk management strategies, you cannot make it as a successful trader.

By having adaptive risk management strategies, you will realize a number of benefits:

  • Trade for a long period of time
  • Make modest gains of your investment without much stress
  • Be at a good position to protect your capital

Having and Sticking To the Same Ratio

The ratios that you have will play an important role in determining your success as a trader. In this, the ratio refers to the risk reward ratio.

This ratio tells you the maximum amount of profit and loss you can take per trade. Though there is no recommended ratio, most traders prefer using a 1:2 or a 1:3 risk reward ratio.

The first ratio means that a trader is willing to lose a dollar to make a profit of $2. For instance, you can open a trade and be willing to lose $100.

If this happens, your profit should be above $200. You allocate the risk reward ratio using the stop loss and take profit.

A stop loss automatically stops the trade when your maximum loss level is reached. A take profit on the other hand stops the trade when your profit level is reached.

Many traders do not stick to these ratios. They extend their losses hoping that there will be a reversal.

More (generic) Tips

Use Trading Tools

This is one of the most important tips to help your Trading Business. You can find market information by taking advantage of online trading services and software for day traders.

Take time to consider how your trading software can work for you. Many programs provide graphs, alerts, watch lists, trends, market analysis and other tools to help you learn wise trading methods.

5 Tools That Will Improve Your Skills

Mentor

In any field that you venture into, the role of a mentor should never be under-estimated. This person may be an acquaintance to your or, indirectly, a professional you do not know but appreciate.

When you have a mentor, you have someone to look up to. A professional who has been there for a while and with more experience, , which can help you avoid common mistakes or learn faster.

Take Independent decisions

In trading, there are so many noise makers that might hinder or aid your decision making process. These noisemakers include commentaries from financial and economic ‘experts’ who appear in major business news channels on a daily basis.

If you want to fail, you should listen and act according to these guys’ proposals. If you want to succeed, listen to them and make your own independent decisions.

In this, TraderTV Youtube Channel can give you a big hand.

Practice

Practice makes perfect. If you want to succeed as a trader, you must be ready to spend a significant amount of time practicing.

If you are new to trading, you should practice on a demo account to identify the appropriate trading plan for you.

If on the other hand you are an experienced professional, you should also practice on new strategies.

This will help you come up with new and better trading strategies that will make you even wiser.

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