There’s a lot of information floating around out there on how to make a million bucks as a day trader. Some of these little advice nuggets are great, don’t get me wrong — but there aren’t really any comprehensive guides filled with actually good suggestions about day trading success. You’ll either find low-effort listicles that give you vague information, incorrect facts or pie-in-the-sky ideals that aren’t realistic.
I’ve personally written tons of material on how to be a successful trader, but that’s a lot of info to comb through. Should you? Of course! The purpose of this list is to give you a bite-sized guide to some of the best and most accurate advice out there, and I sign off on every suggestion here.
1. Stay mindful.
Don’t click away — mindfulness may not be something you subscribe to as a lifestyle choice, but it certainly helps you when it comes to trading. If you aren’t willing to fully try out mindfulness, just think about it like this in the context of trading: it helps you keep your head above water and puts logic before emotion.
Consider these small tips when it comes to using mindfulness in trading:
● Write down your emotional state after you successfully close a trade. The trade itself doesn’t have to be successful, it just has to be complete. Examine how you feel after losses and gains.
● Record your decision making process. This helps you be aware of how your emotions influence your thoughts, and it also allows you to fine tune and/or replicate your process.
● Meditate. How invested in meditation you get is up to you, but at the very least take some time to try and clear your mind to improve your self-awareness.
● Work out! Going to the gym and being healthy helps you feel better physically and mentally, which improves your ability to manage your emotions.
● Piggybacking, nutrition is important to mental acuity. When you feel sluggish physically, so does your mind.
Staying self-aware is absolutely necessary when it comes to being a successful trader. This allows you to examine your thought process and judge it reasonably — never be ruled purely by unbridled emotion.
2. Love the art, not the rewards.
I’m a successful day trader and I’ve made large sums of money doing what I do — saying I didn’t love that would be a lie. However, I don’t continue to day trade to make more and more millions. I do it because I love the process and strive for excellence, no matter what the rewards bring.
This is a problem with many fledgling traders and I have to hammer this lesson into their heads over and over again: don’t become a day trader with the expectation that it will make you a millionaire. If that’s all you think about when trading, you’re going to fail. You’ll give up quickly because results aren’t coming fast enough. You’ll take shortcuts and screw up — it’s a losing cycle.
If you want to “win” at day trading, you have to invest time, energy, education and resources into the tools you’ll need to succeed. No shortcuts, no lofty expectations. When you love the process, you’ll find you’ll be rewarded handsomely for your dedication.
3. Stay educated.
And I’m not just saying this because educating newbie traders is what I do. If you want to be successful as a trader, you have to get used to the fact that you’ll be keeping up with your education for the rest of your trading career. Trading isn’t like learning a trade skill, where you lather, rinse and repeat your way to a pay check. You have to understand intricacies, trading psychology, instinct and market patterns. These things change — trading is fluid.
If you want to continue your education — which you should — consider these options:
● Find and establish a trading mentor. This will be an experienced trader who can guide you in the right direction and give you advice. This is especially crucial to accomplish if you’re a new trader.
● Always review your knowledge. If you forget a trading term or concept, don’t guess or assume your knowledge is right. Look things up and constantly refresh your mental reserves.
● Review your trading process frequently. Not only do you need to be educated on the ins and outs of trading, you also need to learn about yourself. What are you doing that is successful? What flaws do you have that are keeping you from that success?
4. Understand loss is part of the process.
Many newbie traders come to me and say something like “That’s it! I’ve been operating at a loss for a month! I quit!” Sure it’s disheartening to lose money consistently, but always remember: you have to struggle to succeed.
Not every trade you make will be successful, and this is especially true when you’re just starting out and establishing what the best trading method is for you as an individual. If you see long periods of time with loss after loss, don’t blame the market — blame yourself.
Is that harsh? Perhaps — but failure is just a part of the business. We learn from failure. Insanity is doing something over and over again with the same negative results, and this certainly applies to training. If you want to see less failure, adjust your process and try again.
5. Short term goals are better than long term ones.
This goes back to thinking you’ll be a millionaire just because you’re a day trader. Patience is key in this business. I didn’t get to be where I am today because of a few lucky trades in the span of a year. This is measured success based on my own advice here. I adjusted my processes, worked hard for years and thus I’ve become a successful trader.
It’s important to recognize that where you’ll be at the end of this year is more important than the imaginary millions you think you’ll have in five years. During your first couple of years trading, you’ll have rocky points. A better way to approach goals can be summed up like this: “I want to turn a profit by the end of this quarter” vs. “I want to make 250k by the time I’m 30.”
6. Be smart with your money.
Finally, and perhaps most importantly, always consider the safety of your money when trading. Don’t treat day trading like a craps table where you can bet it all and win big. Here are a few examples of how to be fiscally wise with the money you’re using for day trading:
● Invest some of it. Don’t just leave it all in a bank where it’s growing interest at a snail’s pace. Whether you’re looking into mutual funds or stocks and bonds, put investment opportunities to good use.
● Never leave yourself with the potential for an empty bank account. Save a chunk of money somewhere outside of the accounts you use for trading and don’t touch it!
● Focus on high interest debt. If you have a credit card with a 30% interest rate, pay that off first. Don’t think that just because you’re making some money trading that means you’re free and clear to ignore other fiscal responsibilities.
● Budget your trading. If you can’t afford to make a trade, don’t. The money you have right now is always more important than money you might have theoretically.
Again, there’s a mountain of great advice out there where day trading is concerned. If you ever need a refresher, or a reminder to stay focused on your goals, bookmark this page and review it from time to time. Stay grounded, look forward and find trading success.