A Key Mental Attitude of the Successful Day Trader
Seeking Alpha Analyst Since 2010
Staying neutral means to be emotionally detached from your day trading decisions. You probably know guys for whom the world sucks if they take a loss of $100 and if they make $1000 they are on top of the world. They are definitely not neutral.
If you are like that, then your day trading game will almost certainly be driven by fear and greed; if you are down $100 you probably don’t want to take a loss, just because you know that you will suffer emotionally. If you are up $1000 you might want more, even though you should just take profits. Or you might end up taking profits way too early because you are afraid that the position might turn against you. This is not good day trading.
The professional day traders don’t let the day-today oscillations in their account faze them. The results of one week don’t matter much, not even the monthly results. It’s just a small blip of time in theirday trading career. The day-to-day oscillations actually don’t matter much.
Emotional ups and downs are pretty normal for beginner day traders. If these emotions influence your day trading decisions too much, then I would strongly advise you to go back to paper trading in order to gain the confidence you need to not let those oscillations affect you too much.
You probably know the situation where a trade is going against you, and you start looking for other reasons why it is still a good trade and you should hold it. This is very dangerous for day traders, since it leads people to breaking their stops — and losing big.
As a day trader, your entry and exit criteria have to be absolutely clear before you make a trade. Switching strategies while you are in a trade is one of the worst things you can do. You can always find a reason for your position to go up or down, but you don’t see the actual price movement anymore. You are shifting from reaction to prediction! A day trader should under no circumstance try to predict future price movements. That’s a losing proposition, and the markets feel no remorse for those traders.
As day traders we have to play the actual price movement, not what we think the movement should be! Please leave prediction to investors, you are day trading. They always say the way a day trader becomes an investor is when he can’t let go of a bad trade.
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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