Many people try trading but few can claim to build a successful career.
It’s a tough life for new traders. It takes a lot of studying to understand how markets work, to develop a trading strategy that works for you & to master personal discipline.
Of course the rewards for those that make it will be worth the tough times, hard work, stress and frustration. When I started trading back in 1987 & through the early 1990’s, trading courses did not exist.
In fact mobile phones were only being introduced, but they were not the smart phones we have today – you could only make a call, nothing else. Eventually text messaging was invented!! My digital world had begun!
When we traded in the LIFFE (London International Financial Futures Exchange) pits on the trading floor, we did so by shouting the orders across the pit, so all the traders could hear who was trying to buy and sell what.
We wore very brightly coloured jackets to distinguish ourselves form other traders, banks and broking companies. We all had a badge with a 3 letter trading mnemonic which the counter party wrote on his or her trading card (yes there were many successful female traders in the testosterone fuelled environment).
We agreed the trade by shouting and with hand signals (because it was so load on the trading floor that you could not often hear what the person next to you was saying, let alone your counter party on the other side of the pit!
Once the trade was agreed we would write the trade details on a card – one side was for buys and the other for sells.
We would then give the cards to the clerks who would input the trade in to the exchange’s matching system.
So my point of describing my ‘trading in the analogue days’ is to show you how tough it was to learn to trade before we actually started on the floor. There were no live classes and certainly no online courses,
because the internet did not exist. It had never been heard of.
We learned by trial and error in the pits. While we were trying to understand financial markets & learn to trade we had to almost physically fight to actually get a trade executed.
It was a dog eat dog world where only the loudest and most aggressive traded. The failure rate was over 90%!
I learned by the simple process of trial and error.
There were no paper trading accounts, no demo accounts. You could not stand in the pits and pretend to trade!!
Eventually the floor shut and my 13 years of pit trading was now a useless redundant skill. Screen trading required a completely different skill set. All the floor traders had to learn how to trade all over again.
Some wealthy traders blew everything in the process. Some traders who had barely survived on the floor, became masters of the universe when Saturday in front of a screen. Fortunately I made the transition to online screen trading & continued to build a successful career in the financial markets.
So here are my top 6 day trading mistakes that beginners often make.
- Not having a trading plan. It’s important to have a clear strategy in place before you start trading. This should include your entry and exit points, as well as risk management techniques.
- Not managing risk properly. Day trading can be risky, and it’s important to have strict risk management techniques in place to protect your capital. This includes setting stop loss orders and not risking too much on any single trade.
- Overtrading. It’s easy to get caught up in the excitement of the markets, but it’s important to stick to your plan and not overtrade.
- Chasing after losses. It can be tempting to try to make up for lost trades by taking on more risk, but this is a dangerous strategy that can lead to even more losses.
- Not having enough capital. Day trading requires a significant amount of capital, and it’s important to have enough to withstand the ups and downs of the markets.
- Not being patient. Day trading requires a lot of patience and discipline. It’s important to wait for the right opportunities and not get caught up in the hype.
These are the top 6 day trading mistakes that beginners often make. By avoiding these pitfalls, you’ll be well on your way to becoming a successful day trader.
Jason Sen.
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