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How to be a successful day trader?

By Charles Hopkins Published 03/13/2006 | Finance

For many people day trading is too intimidating a thing. That day trading is not everyones cup of tea is true. But many just stay away from it due to the misconceptions they have regarding day trade. But if they had known better they might have considered investing more time and money on day trade. Because although the risks are high the rewards are also great. And the emotions you go through during a successful trade are rare. 

It is a fact that not everyone can be a day trader. One needs  to have a specific set of skills and a few character traits to be successful at this. One needs to have an analytical mind, he needs to be good at problem solving and should have the patience to learn from his mistakes. He should also know how to use  his profits wisely and how to bounce back after a serious loss. Following are few of these basic character traits that we discuss in detail. 

     Confidence: If you plan to be a successful day trader you have to be confident. There are no two ways about it. Day trading means that you have to decide, and decide quickly. If you are not sure about your decisions, if you are plagued by self-doubt chances are you might miss out on the best trading opportunities of the day. You have to believe in your decisions and go ahead with them. And if you are generally an indecisive person it would be advisable for you to try out a different career.

     Discipline: To be successful at day trading you need to have the discipline to make a plan for yourself and then stick to it. When you are dealing with stocks there is always the possibility that you may win big or lose big. But if you are a disciplined person you would know what your limits are and when you should stop. You would never let the emotions of greed and fear take control of you. Instead you should have the ability to leave the market as soon as you have reached your objective.

     Decisiveness: People good at day trading never hesitate. They trade at the first opportunity they think is right. Being tentative would mean losing out on the best trading opportunities of the day.

     Passion: Day trading generally involves a lot of analysis and understanding of the market. For which you have to closely follow the daily business news, you have to interpret various charts, crunch numbers and make sense of the quote screens. And you have to do all this in an extremely fast environment. So for someone who doesnt feel that passion for it, things can get extremely difficult.

     Dealing with failures: When you start day trading you should get one thing clear in your mind you can never expect to win every time here. You will lose from time to time. The only thing you have to make sure is that you win more than you lose over a period of time. If you are able to accept this fact then you can go ahead and be a day trader, but if you are terrified about losing then its better for you not to venture in the markets.

     Concentration: While you are at day trading you have to assimilate a lot of data which you have to analyze, arrive at decisions and then carry out them. And all this happens in real quick time. So you got to be able to concentrate and concentrate hard. You should have the stamina to do so throughout a day and if you are good at avoiding distractions you will make a good day trader.