Beginning Traders Can Learn to Day Trade Effectively

By trader7757, 28 June, 2010, 4 Comments

There is a general feeling among experienced day traders that beginning traders cannot trade profitably for several years. As a trading educator, however, I have found that properly trained beginning day traders can trade effectively from the start. However, the trader must be motivated and well versed in the material presented, and have the self discipline to adhere to the parameters of the trading system being taught. This is, of course, no small task. Just the same, the financial rewards far outweigh the time and effort expended to develop the skills necessary to trade.

In my program, The E-mini Trading Professor System, we have found that beginning day traders can be a profitable within several months of starting our system. It is important that the trader sticks with the rigid guidelines established for proper trade setups and maintain that discipline throughout the course of an average trading session.

Once a beginning trader learns to day trade only with the trend, which is one of the most important aspects of our trading system, trade selection becomes very far easier process than trying countertrend trading techniques. Learning to trade with the trend is no small feat, either. There are many countertrend trades that, at first glance, appear enticing and a sure bet to earn money. Unfortunately, countertrend trades are generally just retracements in a broader trend and must be avoided in order for the beginning trader to profit.

Much of what we teach in day trading centers around the psychological/emotional approach that is necessary to trade successfully. Many trading educators do not devote much time or effort in stressing the importance of psychological/emotional considerations. We consider these issues to be among the most important and toughest skills to master in the day trading process and devote several modules in the course that consider psychological/emotional considerations at length. If you can control your mind, you can control your day trading and make sound, rational decisions about selecting the proper trade set up.

While every day trader may not be ready at two months to trade profitably, many are. It’s important to understand that every beginning day trader assimilates information at a different rate and in a different manner. That being said, some traders are ready to trade earlier than others. On the other hand, I have not found a correlation between how soon a trader is ready to trade and the ultimate success they achieve. Simply said, some traders are ready to trade earlier than others, but once the trading methodology is assimilated there is no appreciable difference in the actual performance. I encourage beginning day traders to take their time and learn the information at a rate they are comfortable. This approach assures the proper retention of the information.

Bottom line; beginning traders can trade profitably sooner than it was once thought. I say this was one caveat though, the traders who have learned the information and practice the most on a demo account are the ones who enjoy the greatest success. Jumping into trading a live account with real money involved is not encouraged; on the contrary, it is far preferable to hone the beginning trader’s skills on a demo account so that they understand, in a real sense, the material presented in the course and can apply it.

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Once the novice trader has proven his or her competence in basic trading, he or she has started down the path to trading success. Day trading skills are important to assimilate in a timely manner and hone with a solid dose of demo account trading, followed by live trading on the contract they have chosen. In the day trading world though, chart reading skills and trading experience are only one part of the equation for success. The next component in a successful traders skill set is the ability to manage trades.

Do You Keep a Trading Diary?

By trader7757, 10 February, 2010, 1 Comment

The point of keeping a trading diary is to remind me that I’ve must remain a student of trading at all times. Regardless of whether I’ve traded 25 years, or 25 months, or 25 minutes it is important to keep the student mentality. In my opinion, this is where many traders fall down. Learning to trade is an ongoing process, and the market has many moods and unique price action. Sometimes it can be months or years before similar situations arise, and it’s handy and useful to note these anomalies so that you might be better prepared the next time they occur.

Natural Born Traders: Fact or Fiction

By trader7757, 23 January, 2010, 1 Comment

dayThere is a common misconception that some people are born today trade. In my experience, after knowing hundreds of day traders, I have never met a trader who could naturally trade without any training. I will readily admit that some day traders are quicker than others to learn the basic principles of trading, and I would also go so far as to say that some traders have a difficult time learning even the rudimentary principles of traders. After all, we are all gifted with different skill sets, and we are not all set up to be futures traders.

This contrasts sharply with some other fields of endeavor. For example, I have a friend who is a natural born golfer. For as long as I have known him he could hit a golf ball out of sight. He can shoot even par no matter what the weather conditions. He can even shoot par when he is intoxicated, which in itself is a miracle. For whatever reason, this relationship does not hold true in the trading venue. Perhaps it is because of the natural illogic of trading systems, or perhaps trading does not necessarily lend itself to natural ability. I don’t have the answer to this question.

I am an eternal optimist, and have found that most individuals who are willing to put a certain amount of book work, a lot of practice, and dogged determination can learn to day trade very effectively. I must add one caveat, however: I have met several people, a very small percentage, who simply were unsuited to trade, and it became apparent very early in their training that trading just didn’t suit them. Again, this is a very small percentage.

It is my opinion that great day traders are trained, seasoned and combine years of experience before they become truly great traders. Unfortunately, trading on Wall Street is a very stressful field of endeavor and most day traders exit the trading game before they realize their potential. Most major investment bank trading rooms are filled with young traders, with a a seasoned veteran overseeing operations of the trading operation. I am 52 years old, and my limit for trading is about four hours. My mind tires and my concentration wanes, but the trades I make are generally well thought out and years of experience keep me out of the bad trades and help me to recognize the good trades.

And that is the rub. As a new trader you are going to make some bad trades, it’s inevitable and it is okay, if you learn from your mistakes. On a given day, there are many set-ups that look enticing, but there be one factor that precludes that trade from being successful. Your ability to discern that single negative factor is what will make you a good trader.

I want to make one very important point, though. You don’t have to be a great day trader to make money in the market. If you have learned a good system, have the proper self-discipline, and can execute your system with a high degree of accuracy…you can be very profitable in your trading endeavor. You don’t have to be great, just good. On the other hand, if you stick with trading for a long while you have the potential to be great. The downside to this situation is humorous, though. You will be the only one who knows you are great. Unless you are trading for a large investment bank, you will have to be content with knowing you are a great trader and leave it at that. But who really cares? As long as your futures trading account reflects the excellent results you are enjoying, isn’t that enough?

In summary, learn your system inside and out. In my day trading, I also learn a number of alternative systems inside out. Work on the self-discipline required to make your trading effective. Avoid entering trades based on emotion. Further, always work to improve your trading, keep a journal of your trades, and review the trades that did not work out so you don’t repeat them. And most importantly, be persistent and dogged in your approach to trading, strive for perfection, even though perfection is nearly impossible. We all have the potential to be great traders, but most don’t reach deep enough to realize their potential. Be one of the few that reaches his potential.