Ask Yourself! Is Day Trading for Me? Yes You!
Don’t start day trading until you ask yourself some basic questions. Hopefully you know that 90% of day traders fail and when they fail they fail hard. Joe Campbell is just a small example of what can happen to you if you don’t totally understand the risks of being a day trader. Granted that is an extreme example but this blog (Beyond Debt) is about helping traders minimize mistakes and save money so I don’t mind starting off with an extreme circumstance.
If I can save you from making financial mistakes by NOT starting a day trading journey then this blog and I have done a great job. However, maybe you are on the fence about day trading no matter what you read or what I say. If that is the case then at least ask yourself, is day trading for me? Be honest too. It’s ok if you don’t day trade. Chances are your life will be better off.
Ok, so I have peaked your interest and you truly want to know if day trading is for you. Good! Then let’s answer some serious questions that could possibly save you from making a HUGE mistake. And don’t forget… be honest with yourself. If you answer YES to all of the questions then maybe give day trading a try and move on to the next part of this series. If you answer NO to any of the questions below I would seriously consider NOT venturing into the day trading world. If you do, more than likely, you will be sorry you ever did.
Ok! It’s Time to Ask Yourself, Is Day Trading for Me?
BE HONEST With YOURSELF!
If you answer NO to any of the below questions don’t start trading!
Click the plus sign on the right hand side of each question toggle to see why you should ask yourself the question you just asked.
Do I have at least $5,000 extra to begin with?
This number should be $10,000 because $5000 is a very conservative figure but it can be done with 5k if you are conservatively smart. You will find that the less money you have to start with the more obstacles you will have to overcome.
Will I be fine with losing my entire investment?
If 90% of traders fail chances are, higher than likely, you will fail too. If you are ok with that and if you are ok with losing your initial investment then say yes and move on.
Can I make a living without day trading?
You must be able to support yourself without trading profits. If you think in the beginning you will use trading as a means to pay your bills you will find out really quickly you are 100% wrong.
Am I a parent who can support myself and my family without worrying about losing money?
Again you must be able to support yourself and your children without thinking about surviving in the world. You will lose money. Period! So, the most important thing in this world should be your family. Take care of them without day trading as part of your financial plan.
Do I have free time during some of the days of the week to trade?
Unless you live in another time zone such as Australia you cannot successfully day trade if you have a 9 to 5 job. Look into swing trading as an alternative.
Am I a patient person?
Trading is about being patient and waiting for your setups. If the trade doesn’t come to you don’t trade. Jesse Livermore once said, “It was never my thinking that made the big money for me, it always was sitting.”
Can I control my emotions?
I thought having kids was emotional. NOPE! Trading beats that by a million miles. You can be the happiest person in the entire world and seconds later be on the verge of suicide. That reminds me… Never go to the bathroom when you are in a trade.
Can I study and find a strategy that works for me before trading live?
You can’t just start trading day 1. What works for 1 person might not work for another. There are too many factors that come into play to think you can mimic someone else’s trading style. You must find what works best for you and that takes time, trial and error.
Can I make a plan and be prepared before making a trade?
You cannot trade without a plan. Here is a short example of what a plan might be. I will buy 1000 shares of XYZ at $9.90. If it goes to $10.10 I will sell half and use $10 as my guide to bail on the rest. If it goes against me and falls to $9.75 I will bail out immediately and move on.
Can I cut my losses quickly without adding to my losing position?
You will take losses. It’s part of the game. However, if you cut your losses quickly because you stuck to the plan you set before trading you will start to see your losses are just small minor losses and not devastating blow ups.
How did you do?
Great! If you answered YES to all of them move on to the next part of this series and give day trading a try. Set a maximum amount you plan to lose and give it your best shot. It could take years to get good but if you are patient, persistent and smart about your day trading journey you might be successful.
I Answered No to Some of the Questions
Uh oh! Which questions?
If you answered NO to numbers 1, 2, 3, 4, 9 and 10 then run for the hills and get out before it’s too late. Stock market gurus are doing everything they can to get you to give them your money. They will convince you, fool you, plead to you, urge you, yell at you and entice you with last minute discounts. Once you have given them your money you will be shuffled into the crowd and you will never get that money back. NEVER!
If you answered NO to numbers 5 through 8 you might be able to make adjustments down the line and start a day trading journey when things turn around from NO to YES. Don’t be fooled! Stock market gurus don’t care about you! I care! If I didn’t I wouldn’t be writing this. So, if you answered NO to those questions above and you really want to give day trading a try, take a few months to make changes. Take your time and see if you can get to the YES so you can truly fit day trading into your financial plans.
Never trade without a plan!
I can’t stress this point enough… most people have no business day trading. That probably means You. Yes YOU! Please don’t get mad, please don’t block this post out and please don’t try to convince yourself that I am wrong and You know more than me. Trust me I know more than you realize and I am here to help you. If you can believe it, I have watched people fail HARD and I have watched people have a string of success until the day something went wrong and then… they failed HARD. Lastly, this post isn’t a post to try to discourage you. In fact, I am trying to enlighten you, educate you and stimulate your thinking by getting you to question yourself which is exactly what you need to do for all your major decisions in your life. ESPECIALLY DAY TRADING!
Let’s move on to the next part of the day trading series.
Some of the links in this post are from my sponsors. I thought you should know because honesty is better then sugarcoated bullsh*t.