Tuesday, 17 March 2009

Day Trading Online Errors

Day trading online leads to some very common mistakes made by a majority of new and intermediate traders. Understanding that you are making these mistakes are sometimes the first step to fixing day trading online problems. Take a look at our day trading online errors and identify which ones you might need to work on.

Day Trading Online Error #1: You Have No Training
Many people dive right into the day trading markets without even contemplating the risks that await them. The markets are like the food chain in the ocean. The big fish are just waiting to devour the innocent new guppies. Don't become a guppie in a sea of trading sharks.

Instead, start off with a good book and understand the markets. Try out a few courses, seminars work your way up to a trading mentorship. Sometimes the best ways to learn day trading online is to sit next to someone who know how to do it. You should know what you are jumping into and be prepared to handle the day trading online markets with confidence.

Day Trading Online Error #2: You Are Too Emotional About Money
When day trading online, start to change the way you feel about money. You do not want your emotions to come into play while you are day trading online and if you are in love with every penny, you will not be able to become a success at day trading online. You must desensitize yourself to the concept of money.

When day trading online, try starting out with smaller share sizes. The share sizes should be small enough so that your heart does not start pounding and your blood pressure does not rise every time the trade goes against you. Once you are comfortable with the share size, you can try a little bigger size and work your way up.

Day Trading Online Error #3: You Do Not Hold Yourself Accountable
Day trading online is tough, but often times we let ourselves off the hook when we should not. There are times when you know you should follow your trading plan, but you still don't listen. Who will tell you to do day trade otherwise?
The solution is to keep track your day trading online history by using a daily trading diary. Write down what happened, what made you lose control, or even what made you stay on task? Tracking your progress on a daily basis. This will help you fix repetitive problem and avoid futures losses. It can also help you erase a little more emotion from the trading process.

One very popular tool these days is the online trading blog. Many traders use it like an online journal. Day traders get to share their progress with the trading community and learn from each other's errors. You can email us at priyanka@tradethemarkets and apply to have own trading blog.

Day Trading Online Error #4: You Expect To Make Money
When most day traders enter and trade they don't even want to think about the concept of losing. Your have your fingers crossed and refuse to look in the rear view mirror. Sometimes, you will use a calculator to predict how much you'll make and how you'll spend the profits, which are not yours yet. It's dangerous to anticipate profits.

Instead, when you are day trading online, enter a trade knowing that you may not be right this time. By doing so, it can be easier to acknowledge if a trade goes against you.

Day Trading Online Error #5: You Go With Any Indicators
Day trading online with the help of the latest technological tools is great but know them first. Find the right indicators for your personality. Do you research. Maybe the squeeze indicators if right for you, or maybe you trade better with the scalper.

Day Trading Online Error #6: You Do Not Know How To Go Short
Day trading online means taking long as well as short trades. If you do not learn how make short trades, then you have cut yourself out of a number of profitable trades. Many day traders think that shorting is too risky. It is riskier not to know how to short. The market is a two-way street, and the person who doesn't short is missing a part of the game.

Day Trading Online Error #7: You Do Not Know Which Market Is Right For You
All day traders like to make money. Professional day traders like to make money in a specific market and matches their personality. Don't spread yourself too thin by day trading markets that you don't understand.

Day Trading Online Error #8: Your Timing Is Off
Newbie day traders often make timing mistakes. Timing a trade is never an exact science, but it's important for traders to recognize that there are times when it might be prudent to lock in a profit or cut a loss.

Day Trading Online Error #9: You Are Stop Happy
Day trading online is very difficult if you are placing incorrect stops. This causes traders to get stopped out too early and prevents them from ever making a profit. How much a trader is willing to lose depends on his or her risk-tolerance.

Instead, when you are day trading online place stops according to what the market is telling you, such as support and resistance levels. When placing a stop, let the stock's behavior tell you the best stop placements.

Day Trading Online Error #10: You Do Not Calculate a Risk/Reward
Many day traders do not calculate the risk-reward ratio of a day trade before they establish a position. There are three common components of a stock's risk-reward ratio: the current price, the profit objective and stop exit price. Calculating a profit objective and a stop exit for a trade often involves many factors, such as standard deviation or technical indicators, including Fibonnaci and moving averages.

Before you enter large day trading online trades, learn the basics. If you are a new trader try out trades that do not involve too much risk. Work your way up the food chain and you will be on your way to professionally day trading online.