3 Simple Ways To Start Thinking Like A Professional Day Trader
Take a good look at the picture above. Is this you? Let’s be honest… There is a huge difference between the thinking process of a beginner day trader and a professional day trader. How do I know? Because I used to really suffer from the same problem that I am addressing above. In all fairness I don’t label myself as a professional day trader because I am still putting myself through the educational process. I also don’t label myself as a beginner day trader either because, even though my winnings are small, I have found to be consistently profitable.
So, how should we transition our thought process and grow into being a professional day trader? Better said, how can we NOT CUT WINNING TRADES when our theories on a stock are working… and how can we steer away from the hope and pray method that a losing trade will eventually work out?
Below are my 3 simple ways to start thinking like a professional day trader which have proven to be helpful to me.
Take Some Profit If You Are Right
Lately if I find that I am in a winning trade I take some profit along the way and remove my emotion from the trade. That way I can let the winning trade work for me. If I am wrong then I will be out of the rest of my position at break even so that I can still enjoy a profitable day.
Tip: If you are long 200 shares of a stock sell 1/4 or a 1/2 your position when you are comfortably in the money.
Write Down Your Bail Out Number & Stick It So You Can See It
I write my thoughts on my blog’s watchlist everyday to remind myself of my day trading plan. I find if you write your thoughts down you are forced to remember your plan once the emotion comes into play. You might even want to put strong language down on a piece of paper to remind yourself that if you are wrong you are wrong so GET OUT. For example if you are in a trade that you planned out you can write beforehand, “Don’t be stupid! Remember what you planned to do. If XYZ goes to this price you better GET OUT or else you are the world’s worst trader in the world.”
Tip: Use strong language if you are having trouble sticking to your plan… It keeps you accountable and really helps.
Hope Is Not A Strategy
Every day trader, swing trader and investor uses hope as a strategy to some degree. It’s natural to hope for something to come true. The only difference is that the professional day trader understands when to get out fast when they wake up and realize hope isn’t a working strategy. I mean let’s be real. Every time I play the lotto I hope to win the HUGE jackpot. I even pray to God and promise to be a better human being if I win. Unfortunately I have yet to win. Do you know why? Hope is not a strategy.
Tip: If you find hope creeping into your trading use a hard stop loss and let the broker’s software slap the hope strategy out of you.
There is no doubt in my mind that day trading is challenging. You might see Twitter folks posting HUGE wins which gives the illusion that they are a successful trader. The reality is that 90% of day traders lose money and even the profitable traders who post HUGE wins have days where they too lose big. It’s all just part of the game. However, if something is working for you it’s important to remember that success has many roads and sometimes the slightest change can make the biggest difference.
Some of the links in this post are from my sponsors. I thought you should know because honesty is better then sugarcoated bullsh*t.