Top 3 Day Trading Secrets for Success In Forex And Index Markets
Day trading (or daytrading) can be a very profitable business. It also has the advantage of being your own boss and keeping your own time schedule. Many ingredients to day trading success is well known – lower leverage, trade only better risk reward setups and focus on performance consistency.
However, no one really willing to go the extra mile to disclose their personal secrets to building a sustainable trading career. I think it is no big deal to tell everyone how it is done because it takes a lot of effort to make it happen. Most people are likely going to give up half way down the road.
So here I am, dishing out my secrets derived from common sense.
Secret #1 – Learn to trade profitably all-in all-out consistently first
Many brokerages and trading platforms that earn flow money from the brokerages like to host seminars, webinars, etc. telling tall tales of scaling in/out of trades. Many gurus like to insist that one has to trade multiple contracts to win in the trading game. The truth is that if the key to profitability is trading bigger size, majority of beginners following the advice would become profitable.
Bigger size means more commission. Multiple contracts trading with scale out gives the illusion of consistent profitability even if the method is not. It makes no sense to tell beginners to trade beyond the smallest size.
It is very important to train yourself to being able to trade all-in all-out profitably. This foundation will make you a better trader in all aspect of trade management – correct control of risk from entry, best judgement in managing a position and determination/patience to hold or exit a position when the situation calls for. It is like training yourself for the perfect execution of your favourite sport manoeuvre.
You will become scalable once you master this fundamental step. Remember, scalability is one of the main reasons why we choose to become traders in the first place.
Secret #2 – Expertise in one method is better than many half-baked ones
Once you can consistently profit from one trading method or setup. All you have to do is to keep doing it again and again. It is that simple. You may have the urge to try out something different. You may think that your method is not that great comparing to the ones you over heard from a party or read from a book or forum. Those urges have to be suppressed.
Your goal in trading is to make money. Your job is to execute the profitable method repeatedly to extract money from the market. There is absolutely no point not doing what you know best and instead dip into other trading setups that affects your bottom-line.
You can expand into new trading method or trading setup if it does not affect your bread and butter trade. Just make sure you trade with smallest possible size so that it will not eat into your profit deeply when it is not working out. Trying out new trading methods is very likely to fail, in case you have forgotten how difficult you trained yourself to do the first one perfectly.
Secret #3 – Only after consistently profitable for a prolonged period of time, increase the trading size gradually
Many people drift away from their profitable trading methods once they accumulated a bigger bankroll in their trading accounts. The appetite for bigger return blinded them to take on more risk irrationally.
The funny thing is that the answer to more profit has been there all along in front of them. For some reason they just cannot see it. Well, maybe not patient enough to wait for it to happen.
To make more money, just trade the way you have been doing and wait patiently for the account to grow. Let the account grow enough so that you can increase your size conservatively. This can be a very difficult task to do because you could be having the urge to buy the toy you are dreaming of, or that you need a certain level of income level to quit your regular job to trade full time.
The moment you deviate from the profitable method(s) you are using, you are gambling your trading stake away. All these dreams to be fulfilled are just removed from your possible future. Some people may get lucky from gambling but we all know the odds is stacking against you.
Patience with yourself will pay off big time. Remind yourself every time you get the urge to make a bet or doing something irrational with your trading account.
This is not the same as the story of the tortoise and the hare.
At the end your perseverance makes you the winner as you focus on consistent profitability comparing to others who failed to realize the dream of becoming a trader. In this sense, the hares do not even get the chance to cross the line.
Being a consistently profitable trader is not the turtle in the story either because you go well beyond the finish line. Your trading results will blow away those traders who have difficulties to scale as big as you do. The moment you surpassed the other retail traders in size with better consistencies, you are on your way to join the club of the size traders. You transform yourself from the turtle into a race car driver.