What Does It Take To Be A Successful Day Trader?

Floyd's Four-Gets! Picture this. You can't make any sense of the market, and things are going haywire. You take a deep breath, and quickly click your mouse. You breathe a sigh of relief when the sell confirmation appears on the screen. Six thousand shares had just sold at 7. That's right, a $4,200 profit in only about 20 minutes. This, certainly, could become the highlight of a trading career. That was about the quickest $4200 that a person could ever make. It was 9:46 A.M. The rest of the day was now open. Does this happen everyday to every trader? I think not. However, there are enough of these stories around that the mystique and appeal of independence can be a draw for those that hear of the possibilities. Those who decide to make the commitment to day trading soon learn that the only thing day traders should be concerned about is the next five minutes. Every trade should be a precise, well-calculated move. The goal is (Floyd's Four-Gets) to get in, get a profit, get out (as quickly and as safely as possible) and get away (don't over trade the play). That is the daily routine of the day trader. This might sound surprising, but it is not the job of the day trader to understand the "comings and goings" of the of market movement. The day trader's sole responsibilities are these: 1) End each day "flat," that is, without any positions; 2) Make a profit, no matter how large or small; 3) Keep all losses small and manageable. The most important thing to the day trader needs to be the "fast buck." Most people do not have a concept of the real work of the day trader. They confuse the role of trader with investor. Traders don't invest. Traders trade. They are not necessarily concerned with long-term trends and market conditions. You won't catch a day trader putting in a lot of time with The Wall Street Journal, long-term graphs, charts, and research. In fact, knowing too much could hurt the day trader. Things move too fast. There isn't time to listen to brokers and analysts and to decipher rumors. Day traders may not even know the names of the businesses whose stock they are trading. The stock symbol is the important thing. Besides the three responsibilities of the day trader, there are three goals: 1. To profit consistently and significantly from day trading; 2. To become better day traders with more experience; 3. To maintain a disciplined and business-oriented approach to help attain day-trading objectives. Within the boundaries of the day trader's responsibilities and goals, all market volatility, regardless of cause, must be approached as an opportunity for potential profit. A day trader is not concerned about what is right or wrong in the market nor does a day trader have time to consider the "why" of things. A profit can be made even if a trader is only right 25 percent of the time, maybe even less. The key is making a lot of money on the good trades and only losing a small amount on the bad trades. The important thing is being right on the right ones. Conversely, a trader could make good trade picks 75 percent of the time and yet still lose money. This comes from being in too heavy on the bad picks. To come out on top a trader needs to admit when he has made a wrong pick and react quickly. Those who get stuck on the research and analysts' calls, have overlooked the most important responsibility of a day trade - get the quick profit. Day trading is an intense endeavor, which requires a strong focus. Besides the ability to concentrate to maintain that focus, the following key elements should be in place: 1) Attain knowledge - understand basic market workings and key trading techniques; 2) Display confidence - act on what is known and perceived; 3) Demonstrate the ability to act quickly - pull the trigger; 4) Have a willingness to learn- figure out why instead of getting mad; 5) Be able to accept failure and responsibility - don't blame but learn and move on; 6) Manage money - during good times and bad times; 7) Have passion - be true and committed to beliefs; 8) Practice patience and restraint; 9) Show a facility with numbers 10) Be disciplined - make a set of rules and stick to them; 11) Stay healthy mentally and physically - stamina is needed for intense brain work; 12) Know yourself - how your brain works. A day trader's day can be extremely exciting, tremendously boring or somewhere in between. Being able to live with the ups and downs and at the same time maintaining a truly objective focus is a formula for success. A person who is a self-starter, enjoys independence, and thrives on challenges can be a successful day trader. Remember, Get In, Get Profit, Get Out and Get Away! Make Floyd's Four-Gets your day trader's credo. This article is a synopsis of on opinions and strategies explained in detail in The Complete Day Trader by Jake Bernstein and Day Trade Online by Chris Farrell and the author. Links to both books can be found at www.TraderAide.com. Happy trading! No permission is needed to reproduce an unedited copy of this article as long the About The Author tag is left in tact and hot links included. Questions and comments can be sent to Floyd at floyd@TraderAide.com.