Trading is one of the most rewarding jobs in the world, and the more one gets into it, the more addictive and enjoyable it becomes. There are different types of traders in the industry, and they are known by the number of trades they open and the number of days they hold on to their open positions before closing them.
The successful traders are known for their ability to understand their personalities and thus the type of trader they will develop into; this is one of the most overlooked things when it comes to trading.
As a trader one should know whether they can hold their trades for long durations thus a swing or position trader or they can only have their positions open for short durations mostly within a span of a day thus a day trader.
This is one of the most confidence building factors to one's growth as a trader because when you know where you thrive as a trader, it will be easier to know your edge and thus build on it and create a profitable track record.
Apart from this, there is also a good chance that you will be able to know how much risk you can take and also how much of your capital you are willing to risk on any particular trade.
How to Learn to Be a Forex Day Trader? (For Dummies)
Being a day trader means that you are opening and closing a trade within the span of a day or within a span of the trading session.
So, to be a successful forex day trader you should be able to notice your edge and act on it confidently, this means that you will always be ready to pull the trigger with a pre-determined risk and exit in mind, apart from that you should have your trade management in place too once you are in the trade.
Being a day trader is to be conscious of the asset you are trading, this means you are mostly focused on the price action as it unfolds, and this is the type of alertness many traders lack when day trading and that always hinder their chances of being profitable over the longer term.
A day trader does not have the luxury entering a trade that has not qualified the entry criteria; the day trader should rather skip through a trade and wait for a qualified setup and avoid the risk of putting their capital at risk.
The art of day trading is based on the ability of the day trader being patient and choosy by cherry picking entries rather than rushing and getting burnt. A day trader is more of a hunter with a choice weapon and a choice target if the target is not available the weapon will not be wielded.
Patience is the key to being a successful day trader, as a famous trader once said sitting on your hands is also a position taken and more often the most profitable one. The more you realize that as a day trader it becomes more relaxing and a more lucrative job and a rewarding one at that.
A Day Trader’s Rule Book
Every day trader in the UK has to have these rules appended in their rule book, and they should be part of their mantra as they face the markets on a daily basis.
They should always be ready to follow the rules below in a military-like style manner, which means they should build on their discipline not to break the rules no matter the situation.
That is the only thing that separates a profitable day trader from one who has infrequent periods of profitability or one who only has consistently been a break an even trader.
There is no simpler way of saying that rules in day trading are the core for any day trader’s profitability. These rules are the core in which a sound trading methodology is developed.
A day trader in the UK should have a pre-determined entry, exit, and invalidation levels
This is one of the rules that should adhere to the letter if you enter a trade as a day and you do not have these three levels pre-determined then it is obvious that trade was taken impulsively. The day trader, who has a methodology that does not cover these three criteria is a trader who is also not ready to be trading any live funds.
The more you fail to cover these three areas will mean that you will always be at a disadvantage because without a predetermined entry criteria you will always be in a rush to enter, without an exit strategy you will always be in a rush to get out or be led by greed and hold longer than you need to be, without an invalidation level you will always hope for a trade to go your way even when you are deep in losses.
The three levels are meant to keep your human emotions in check, and they are very important since when they adhere to, they build discipline that will reflect directly on your performance.
A day trader in the UK should have a trading journal
A successful day trader is known after the markets are closed; the day trader will always do an in-depth review of the trades taken on any particular day. The review is referred to the trading methodology derived from the trading rules put in place. The trader knows if he or she is successful by the trades taken following the trading plan.
Trades taken following the trading plan are successful trades even though they ended up in a loss; those taken away from the plan even though profitable are unsuccessful trades.
By journaling your trades, you get to learn more about your weaknesses, and that is the only way you can improve your profitability by establishing consistency. Many traders who do not journal are more likely to be losing traders or at best break even traders, and that is not what you want as a day trader.
