Day Trading is often considered as gambling by many, so people choose not to be a day trader. Being a day trader is a tough job because making money with it is very difficult and only 1 in 10 actually succeeds.
I have been a day trader for last 5 years now. I have seen up and downs in the market on day to day basis. Life of a day trader is not very easy as it seems to be.
However the only reward is the money that you make, there is no limit to it. You can earn millions of rupees in just one year if you can understand and analyze the markets.
No one can tell you tricks of the trade because you don’t make money with borrowed ideas. You need to use your own mind.
However, I can tell you about few mistakes that a day trader should always avoid. With my experience I have jot down a list of 6 common mistakes that a day trader must avoid at any cost.
So here are 6 common mistakes day traders can make-
1. Choosing a Right Stock
How do you choose a right stock? There are thousands of stocks out there but how do you choose the right one. Well you need years and years of experience for choosing a right stock.
Most of the day traders fail to choose a right stock and they lose their money. You cannot choose a stock that is going up right now because that is not the long term strategy.
You might win for the day but lose in long term because you haven’t developed a strategy or a plan to understand the market.
2. Listening to Market Gurus Rather Analyzing Daily Charts
Second mistake that a new day trader can make is listening too much to so called market gurus on TV channels like MSNBC or NDTV profit.
Do not make any decision for buying and selling a stock after listening to these market gurus. This is not a winning strategy for long term.
These gurus could be wrong sometimes and you should develop your own mind to make these judgments. Most of day traders fail because they have a mind of 6 year old.
3. It’s Not One Stock But Overall Market
Unlike long term trading where you choose a stock of company which is performing well for over past few months, in day trading you look into indices rather a single stock.
First you look how whole market is performing and then make a decision to choose few stocks that you want to buy and sell. You always look where market is going and then make a call.
4. Falling for Greed While Buying Selling the Stock
Greed is the only factor that destroys the career of a day trader. You can’t make decisions on greed because it works for a particular but not every day.
You might make money for a day but this is no strategy if you are thinking for a long term. You have to curb your greed and do not let it affect your decision. You will emerge as a winner in long term.
5. Setting Up Right Stop Loss Price
We all know the importance of stop loss. But what price do you need to set for stop loss.
This could be tricky because every trader has his own choice. But according to my experience the price should be anywhere . 5% to 1% of the buying price.
You can choose your own price but pay importance to it.
6. Preferring Long Term Trend Over Daily Technical Charts
Final mistake on our list that a day trader could commit prefers long term trend over daily technical charts. When it comes to day trading it is all about technical charts and not how market is going to behave in long term.
So never confuse these two. You can make a lot of money with a stock on a particular day which is actually not performing for last few months because here day matters not the long term trend.
Stock market is one of the way to become rich but you should avoid some of the common mistakes that a day trader can make otherwise it can ruin your life.
You must learn from these mistakes and succeed in your day trading career.