Beginning stock traders need to be careful in choosing what strategy they will be choosing to start their new career. There are many pitfalls to avoid in order to becoming a successful trader. The odds are stacked even higher against the beginner trader because of his/her inexperience. The first thing a trader needs to trade stocks is a good online broker or brokerage firm. There is a variety of brokers to choose from these days. There are online brokers which offer $0 commission per trade. There are brokers which offer huge leverage. There are brokers that offer better trade executions and platforms that are geared for the professional day trader rather than the ordinary casual investor. Choosing the right broker depends on the needs of the individual trader. One size does not fit all in this situation.
A beginning trader needs to understand that if they choose this as their new career, they have to become totally dedicated and focused on trading day in and day out. For most traders who make all their income from trading, they had to sacrifice a lot to get to where they are now and it took them 1 to 3 years to go from losing money to just starting to become profitable. Too many beginning traders take their new career all too lightly. They think that just sitting in front of a computer typing away here and there sounds simple enough but what they don't see , but soon will, is that trading is 85% mental and 15% technical. It is not as easy as it looks. Underestimating this job is the first pitfall alot of beginning traders fall into.
What is a good risk management policy? Good risk management lets a beginning trader continue trying to profit from trading while making mistakes and losing on trades. A 1% loss per trade is a good start. It is hard to blow out one's account if you are only losing 1% per bad trade.
When you start out day trading as a beginner, you will find that there is a tempation to start working late or take the day off entirely and start fresh the next day. After all, you are not going to get fired or reprimanded by a boss because you are the boss now! One way to get ahead of yourself in this all too common situation to beginning traders is to set a morning routine. For example, you will take a shower at 7:30 AM. Have breakfast at 8:15 AM. Read over your trading plan and start up your computer at 8:45 AM. Open your trading platform and get ready to trade at 9:15 AM. Start trading at 9:30 AM! Sticking to a routine will help you not drift into the oblivion of laziness and lack of direction or purpose. Aristotle said, "We are what we repeatedly do. Excellence, then, is not an act, but a habit." This is so true of trading! As I have said before on this website, form a habit of trading a good strategy, and success is but inevitable.
Starting a new morning routine can be difficult, especially for those who recently quit their day jobs and have just found a new sense of freedom by being their own boss. Keeping your final goal always in mind is one way to stick to your new routine. Why did you start day trading? You did it because you want to be your own boss. You want to gain financial freedom. You want the flexibility and freedom that trading can give you. You can trade anywhere in the world (almost every place in the world today has wifi, believe it or not) and you can choose how many hours you want to work (depending on what strategy you use). Write your reasons for starting to day trade down and read them off as soon as you wake up in the morning. This will be a consistent reminder for you why you started your new career in the first place!
Stock Trading For Beginners