In order to become a successful day trader, it is important that you examine some of the common fears faced by every beginning trader. It is completely natural to feel fear as you make that first day trade. However, in order to move beyond the fear and not let it overwhelm you, let’s consider a few aspects of day trading that potentially might inspire fear, and learn what we can do to move beyond our fears and find that perfect comfort zone that will enable us to trade with confidence and objectivity.
Selecting the Right Broker
Even before placing that first trade, a common fear experienced by many new day traders is the fear of placing large sums of money with a broker. Brokers and broker fees are a fact of life in day trading. When shopping around for a broker, you may be inclined to entrust your money to whichever broker advertises the lowest fees. However, be aware that there are many fly-by-night brokers, so consider not just broker fees, but reliability, trustworthiness, and level of support when choosing your broker.
Fortunately, there are many well-known, trustworthy brokers, including Ameritrade, E*Trade, MB Trading, and Charles Schwab just to name a few, which provide top-level reliable service and support as well as reasonable broker fees. Therefore, when starting out, go with an established broker so that you be assured that your money is being handled properly by a trusted entity. Doing so should eliminate your fear that your money may be mis-managed.
Trading Your Demo Account
It is very common for a beginning trader, anxious to make that first trade, to jump right in and begin trading without really knowing what he or she is doing. The fear of placing that first trade can be overwhelming, and it is difficult, if not impossible, to trade with a clear, objective mindset when the mind is clouded by fear. Therefore, please do not jump into day trading blindly.
Instead, take advantage of the demo account or practice account provided by the top brokerage firms. A practice account will enable you to “paper trade,” which means you can trade in exactly the same way you would a real trade, except that you are not using real money.
Paper trading on a demo account will accomplish two things: it will get you comfortable and acclimated to the actual trading process, and it will give you time to work out your own profitable trading approach without first experiencing big losses. Trading a practice account at first will help you avoid becoming overwhelmed by fear when it is finally time to place your first real-money trade.
Getting the Right Education and Training
Trading your demo account before placing your first real-money trade will enable you to get familiar with the mechanics of trading, and will also give you an opportunity to work out your own best profitable trading strategy. However, many beginning traders are unsure of how to formulate such a trading strategy. Therefore, in order to truly feel like you’re ready to step out onto the day trading playing field and compete without fear of failure, you need to arm yourself with the proper education and training.
There are many excellent day trading books available, written by successful traders who have been where you want to go and can provide you with a beginning roadmap to your own trading success. One such excellent book is Financial Freedom Through Electronic Day Trading by Van K. Tharp, which provides a step-by-step course that takes the new trader through the nuts and bolts of technical and strategic day trading basics.
Another excellent book that covers the very important psychological aspect of trading is Trading in the Zone by Mark Douglas. These and other books will provide you with the foundation of knowledge that you need in order to day trade with confidence.
Even better than books are the many online training programs that are available on the Internet. Many of these day trading training programs include video instruction by successful expert traders, which enable you, the beginning trader, to follow along as a winning trader walks you through his trading process in real time, explaining what he is doing and why he is doing it. There really is no substitute for having an experienced trader take you by the hand and walk you through a successful day trading strategy.
Therefore, make sure that you take the time to arm yourself with all of the day trading knowledge you need and to get the best day trading online instruction that you can. Following these steps will enable you to day trade with confidence, free of the fears that plague most inexperienced traders, and will give you the edge you need to quickly become a successful and profitable day trader in your own right!