Where Do New Day Traders Struggle the Most? 5 Key Areas

struggling day traders

Day trading and investing are some of the best ways to make money in the market. Investing is where you buy an asset and hold it for a long time. Day trading, on the other hand, refers to a situation where a person buys and sells assets within minutes or hours.

The two methods tend to be challenging to both experienced and new players in the industry. It is common for some of the best investors and traders to go through a prolonged winter period. This situation is more common among new traders.

In this article, we will look at some of the reasons why traders struggle and how to handle the situation.

Why day traders struggle

There are several reasons why traders struggle in the market. First, at times, a trader can generate substantial losses because of FOMO. Fear of Missing Out is a situation where a trader buys an asset because everyone is buying.

A good example of this happened during the meme stock frenzy in 2021. At the time, many new traders bought surging stocks like Bed Bath & Beyond and Gamestop only to lose money when their prices crashed.

gme 1st half 2021
GameStop stock price (January-June 2021)

Second, traders struggle because of lack of experience. In most periods, new traders enter the market without having enough experience and expertise. As a result, they find it difficult to make profitable traders or control their losses.

Third, people struggle because of the different market conditions. Some traders are great at trading during highly volatile periods while others make a lot of money in trending periods. Therefore, you might struggle to make money when the market is not within your ideal window.

Further, a trader can struggle because of psychological reasons. This happens in different ways, such as revenge trading and attempts to recover losses.

Related » Problems Faced When Starting a Trading Business

Areas where new traders struggle

Getting stuck can be frustrating, but it is normal. If trading were easy, the success rate would be about 10% higher! You should be persistent, figure out what’s holding you back, divide the problem into small steps, and try to move beyond it.

There are different areas where many new traders struggle in the market. Let’s break down in detail the ones that are most relevant to us.

Related » Fundamentals about day trading

Learn new skills

An important area where many new traders struggle is learning new trading skills, especially for people with no financial background. Most people struggle because of the breadth and width of the trading industry.

There are many terms that new traders encounter in the market. For example, in technical analysis, there are concepts like indicators, which include moving averages, Relative Strength Index (RSI), and the Ichimoku. 

In addition to this, there are new concepts like chart and candlestick patterns like triangles, rectangles, and head and shoulders patterns. 

Further, there are fundamental issues such as the economic data analysis like inflation, employment, and manufacturing PMIs. In companies, there are issues like earnings and corporate governance. Therefore, many new traders struggle to incorporate these issues in their trading strategies.

A solution to this challenge is where you dedicate some time to learn these concepts before you start trading. Fortunately, there are many resources that you can use, including YouTube. These platforms have so many easy-to-understand content that you can use. 

Also, you can take an online course from a highly successful day trader. These courses will simplify the process of trading.

Related » The Key Soft Skills for a day trader

Creating a strategy

Successful traders and investors are those who have developed a unique trading strategy. For example, there are stock traders who aim to profit from pullbacks after the market opens. Other traders are scalpers who rely on the VWAP indicator. Other traders use different strategies like scalping, trend-following, and reversals.

Many new day traders struggle to come up with their ideal trading strategies or implement them in their trading accounts. In our experience, we see many traders doing well in their demo accounts and then they struggle in a real account where money is at stake.

But the opposite can also be true! You have tested many strategies, do well with most of them, and don’t know which ones to adopt once you go live.

Related » The Art of Taking Action in Trading

There are several remedies to this. First, there is the 10,000 trade approach, which recommends opening at least 10k trades in a demo account before moving to a real account. While these are too many trades, implementing all of them can help you refine your strategy.

Further, having a good mentor who is experienced in the market can guide you. A good example of this is TraderTV, a YouTube channel that gives you access to live trading sessions from real traders.

Remember: the strategy has to be Achievable, and you have to measure it from time to time to see if it is getting you the results you set for yourself. One good way to do this is to follow the SMART approach.

Improper expectations

Many people start trading with a lot of expectations. Some people want to double their money within a few days. Others, on the other hand, want to make a certain amount every day. For example, a trader with a $1,000 account can aim to make a $50 profit every day.

It is always good to have expectations in your trading journey. However, we recommend having reasonable expectations and dreams in the market.

For one, not all your days and months will be profitable. Even the best traders in the world go through challenges and winter sessions.

Related » Struggling Days? 2 Strategies to Reboot Your Approach

Managing emotions

Psychology is one of the most important things in the financial market. It is also one area that many people, especially new traders, ignore in the market. 

There are many important emotions that people go through in the market, but out of these two are at a higher level: fear and greed.

Fear is manifested in different ways such as avoiding to trade, executing small trades,  and taking losses before a trade matures.

Greed, on the other hand, is manifested in areas like Fear of Missing Out (FOMO), holding trades for so long, initiating big trades, using excessive leverage, and leaving profitable trades open overnight.

There are a number of things that can help you manage your emotions. First, you should always start with small trades and increase them with time.

Second, you should be extremely patient in the market. Further, you should consider talking to a professional if you are not in a good place emotionally.

Focus

Last but not least, many new traders find it difficult to maintain focus when trading. One reason for this is known as information overload, where there is too much information to process.

There are other ways in which these traders lose focus. For example, some struggle with the growing hype in the market, too much social media activity, and using many technical indicators.

You can solve this situation in a number of ways. On technical indicators, you can focus on just a few of them. Many successful traders use one indicator, especially the VWAP. Similarly, in terms of information overload, you can solve the challenge by narrowing where you get your information.

Summary


In conclusion, day trading can be a challenging endeavor for both experienced traders and newcomers. Understanding the reasons behind these struggles is crucial in finding effective solutions.

New traders, in particular, encounter obstacles in learning new skills and creating a successful trading strategy. Managing expectations, emotions, and maintaining focus are also essential aspects of overcoming these challenges.

By dedicating time to learn, seeking mentorship, setting reasonable expectations, managing emotions, and staying focused, traders can navigate these difficulties and improve their chances of success in the dynamic world of trading and investing.

External useful resources

  • What are beginner traders struggling with the most? – Quora
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