How to Be Disciplined about Your Day Trading
Day traders must start each day fresh and finish each day with a clean slate. This daily regimen reduces some of the risk, and it forces discipline. You can’t keep your losers longer than a day, and you have to take your profits at the end of the day before those winning positions turn into losers.
That discipline is important for day traders. When you day trade, you face a market that does not know and does not care who you are, what you’re doing, or what your personal or financial goals are. There’s no kindly boss who may cut you a little slack, no friendly coworker to help you out, no great client dropping you a hint about spending plans for the next fiscal year.
Unless you have rules in place to guide your trading decisions, you’ll fall prey to hope, fear, doubt, and greed — the Four Horsemen of trading ruin.
So how do you start? First you develop a business plan and a trading plan that reflect your goals and your personality. Then you set your working days and hours, and you accept that you’ll close out every night. As you think about the securities that you’ll trade and how you may trade them, you’ll also want to test your trading system to see how it may work in actual trading.
In other words, you prepare and have a plan. That’s a basic strategy for any endeavor, whether you’re running a marathon, building a new garage, or taking up day trading.