Day trading tips – Top 10 tips and tricks for beginners to become a successful trader

Best practices and day trading tips to start your journey to become a profitable day trader

In this article we’ll be running through some of the most valuable day trading tips for beginners. These tips can help as you take your first steps into the world of trading and get involved in the financial markets. You can refer back to these day trading tips and tricks as you go through your journey to become a successful trader.

Day Trading Tips - Successful Trader
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Keeping our trading advice in mind can help if you encounter difficulties, if you’re dealing with tough stock markets or if you’re on a bad run. It’s always a good idea to keep beginner trading tips like this at hand and refer back to them when needed. They can help you get out of that slump and help you push on and get back into the run of things.

Stick to your trading plan

Trading Plan
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Every professional trader should have a trading plan for every single trade. You should always know why you’re getting into a position, where you hope to get out and where you’re going to puke if it all goes wrong. This kind of discipline and strict risk management is going to stick with you for your entire trading career.

Your discipline and mindset stands to you and will ultimately be what separates you from unsuccessful traders who don’t have trading plans. Many traders fail because they don’t know why they’re getting into positions and where they’re going to puke if they’re losing money. One of the most important day trading lessons is to let winners run, while cutting off losers. Unsuccessful traders usually do the opposite which will wipe out their trading account.

Analyze your own trading style and trades

Trader / Self-Analysis
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Planning your trades and trading your plan is crucial for success. However, another great habit to get into from when you start trading stocks is being able to analyze your own trading style and performance. Every trader is going through periods of good performance and bad performance. You got to know where you are in that cycle.

Being able to analyze your own trades and seeing when your performance is slipping will allow you to adjust your trading strategy accordingly. You can lower your position size and take some risk off the table. Vice versa, when you see that you’re trading well, you’ll be able to increase the position size, add some risk and really push on when it comes to your P&L. You can check out our other article on trade analysis for a more in-depth look at how to track and analyze your trading on a spreadsheet. Let’s get on with the next one of our day trading tips.

Recognize and note your emotions

Cycle of Stock Market Emotions
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It’s worth doing this on a daily or weekly basis and it ties in with being able to analyze your own trading and spotting your performance when it starts to shift. When it comes to your emotions, trading psychology and your headspace, you got to know if something external is affecting your mindset. If you lost money over the previous couple of days or weeks, it’s possible that you’re dealing with stuff that is negatively affecting your trading results.

It could be the case that rent is past due or that you have hospital bills stacking up. Outside pressure from external factors and sources like these are forcing to chase everything or forcing to hold your losers with bigger-size. On the flip side you also want to be able to see the correlation that exercise and healthy eating has with strong performance via a strong positive mindset. If you do find yourself on a bad run, it’s worth keeping in mind point number four.

Don’t be afraid to take a step back from the markets

Empty Stock Trader Workplace
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If you’re having a bad run and if your trading performance suffers, take a step back from the screens for a couple of weeks. A break from day trading can often have a very positive impact on your future performance. It helps you to see the bigger picture and to be totally removed from the financial markets for a while. You can then go back to the trading desk with a fresh look, without being biased based on recent action.

Your trading psychology is going to be improved as well as you’ll have a much healthier and a much more positive mindset. You’ve broken the bad influence that negative markets and negative performance has had on your mindset during those weeks. Being able to get flat, close the screens and step away from trading is a very important trading tip for those of you that are going to be struggling and going through bad periods.

Always be researching new trades, strategies and markets

Stock Market Trader / Trading Research
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This is one of the day trading tips that is going to be essential to your long-term success as a trader. Always be researching new trades, new markets and new trading strategies. The mega successful traders today are the ones that were able to adapt and have lots of other trades in the background when they were making money initially. No trade stays the same and no trading strategy works forever. The only constant in trading is change. Funds get involved, flows come in, volume drops off or some stocks get bought up.

Whatever trading strategy is working for you today, is not going to work for you indefinitely. You got to have a couple of cards up the sleeve that you’re ready to play when the time comes. Don’t be that dinosaur that can say: “Oh, yeah this trading strategy worked for me for a couple of months or a couple of years but then it stopped and I wasn’t able to get back to my money-making ways”. Be in this for the long term and have a couple of day trading strategies in the pipeline that are ready to come into play when they are most needed.

Read the big trading books

Trading Book
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There are trading books that are essential to read for any new trader that is joining a prop firm or analyst that is joining one of the big financial firms or brokerage houses. You’re usually given a list of trading books and they ask you to treat these books like the Bible. For example you got books like Market Wizards, Reminiscences of a Stock Operator, A Random Walk Down Wall Street and some of the more entertaining reads. These entertaining trading books might be the ones by Michael Lewis like Liar’s Poker or Flash Boys.

The lessons you’re going to learn from other people’s mistakes and success will stand to you. It’s going to give you a platform to refer back to when you’re struggling yourself in the future. You’ll be able to see how the big traders today started off and learn from their mistakes that they made. You’ll get insights to where they made their big money, their trading psychology and how they’re able to push on to the big size.

And of course you can enjoy the amazing trades they made overnight or from an island in the Caribbean over a phone going back and forth through three connectors. Crazy stories like that can always inspire you and give you some motivation to kick on. You realize that there’s a lot of money out there to be made. These successful traders were once just like you. Market Wizards in particular is very informative for that kind of stance.

Bounce is known for being very strong in the psychology. Liar’s Poker and Flash Boys are very entertaining trading books by Michael Lewis. They’re also very informative to give you a sense of just who you’re up against when you sit down and open up your trading screens in the mornings. Make your list of trading books, start to read these books and take your notes. Know the main lessons and stories that stand out to you and that you can relate to as a trader. You can then refer back to these valuable trading lessons when you need it.

Set goals and review your trading results

Trading Goals
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From the very beginning when you start trading you got to be able to set your short, medium and long term goals. You got to be reviewing your trading goals regularly and adjusting them as needed. If you’re trading very well, you might want to up your profit target for the quarter or the month. If you’re trading poorly, you might just sit down so that you don’t want to be consistently missing it. Know if you’re overperforming or underperforming. Having goals and a clear strategy is absolutely essential for long term success as a trader.

Your goals might be something as simple as not having a loser bigger than 5% in a position or something like that you’ll up your position size by 50% when you have three winners in a row. You can play around with your goals. You can make them very customized and get ideas all across the internet, but it’s very important that you have them and that you’re goal orientated. Stick them up in little post-its around your screen, know exactly what your goals are and give yourself 15-20 minutes a week to review your goals. That way you can stay on track and adjust goals if necessary.

Have a plan ready for black swans

Stock Market Data
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Black swans refer to those events that you just cannot see coming, but that do happen. Something like the collapse of Lehman Brothers in 2008, the flash crash in May 2010, the Brexit in June 2016, Trump’s election in November 2016 or the volmageddon incident, when volatility went through the roof in February 2018.

These all are events that were not expected, but that occurred. They all have some kind of a copycat in the future along with multiple individual black swans as we go forward. It’s very important that you recognize what happened. Analyze how certain stocks did react and have plans ready for the future. For example if a political event is coming, it’s good to know how the stocks did on Brexit or after Trump was elected. There’s a fair degree of certainty that stocks react the same way in the future and then you can make your decision to buy or sell those companies.

Just think of something like oil and OPEC when huge news came out in November 2014 and oil collapsed down towards the 20’s. If that happens again, if OPEC cuts or raises supply, you can have a plan ready to buy or sell the affected companies. It’s the same with financials, you want to know how certain stocks react when there is an interest rate hike or cut, especially if it’s an unexpected decision. There are black swans for every industry out there, along with the market overall. Know what you’re going to do when black swan events happen. Don’t be a deer in the headlights on the day that it does happen, wondering why you didn’t make money when other traders did.

Collaborate with others

Traders / Chart Analysis
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Don’t be afraid to share your trading ideas and success with other traders and investors. There is enough market out there for everybody. There’s enough room for lots of people to get involved and to collaborate. You’re going to have ideas coming at you as well once you start sharing your own. You’ll be able to collectively get better with your friends or your colleagues. If there are people in your class or office who are interested in talking about the market, start getting some different perspectives and start getting some ideas.

You don’t necessarily have to implement other people’s ideas or act on theirs. However, it’s always good to have a different perspective and different set of eyes on what you’re seeing, unless you’re for example in a very particular low volume future with only a couple of trades a day. Don’t be afraid of your edge going and be happy to share your success. You’ll be very surprised at how forthcoming people are with their own ideas if you’re open with yours.

Have fun!

Successful Traders
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This is possibly the most important one of our day trading tips. Have fun! There’s no point doing this job and taking on the stress and pressure that comes with it if you’re not ultimately enjoy trading the financial markets. A lot of having fun as a trader is going to boil down to the previous steps that we’ve talked about.

If you find it an absolute pain to plan a trade, this might not be for you. If you’re not able to analyze your own trades and be able to do the work that’s involved in the background, if you’re just chasing the buzz, this isn’t the job for you. You got to know if you’re having a bad run and if that’s being pushed on by some negative emotions. If you’re not having fun, this is more than likely going to happen. If that’s the case, professional day trading isn’t the job for you.

In case you’re struggling with trading, it’s well worth taking some time to step back. You should do some self analysis and some talking with yourself away from the markets. If you’re not able to come back and research some new trades, strategies and markets, this might not be the job for you. It’s the same if you don’t want to sit down, reading the big books about trading to find out how other traders made their money and what lessons they learned.

If you don’t want to set goals and know what you’re going to be aiming for in the short, medium and long term, if you don’t want to put in the work to be able to be ready for black swan events where you can really make huge money and if you’re totally against collaborating with others, this might not be the best job for you.

Conclusion: Day trading tips for beginners

Excited Stock Trader
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Ok, that’s it with our day trading tips for beginners. Being able to put the work in through all these various steps and trading tips that we’ve just run through is going to help you have fun, enjoy the job and ultimately be more successful. There’s too much work, stress and risk coming at you in this job through all the work that has to go on in the background, alongside just trading, to not enjoy it as an overall activity and pursuit.

If you’re not having fun as a trader, you got to do some serious in-depth analysis and ask yourself if day trading is the career path that you want to go down. However, if professional trading is for you, then go for it! Grab it by the horns and jump straight in. Plan out your trades thoroughly, do your analysis and know how you’re feeling and when emotions are affecting your trading. Be able to step away from the markets, always researching for a couple of new cards up your sleeves. Read the big trading books, know what the big lessons are and what stories stood out to you.

Set your goals as a trader, have them in front of you and always be working towards them. Have your plans ready for black swan events where you can make some real cash and collaborate with other traders while having fun. Now it’s your turn! Did you like our day trading tips? Do you have some other trading advice for beginners that you would like to share? Please let us know your thoughts and feedback in the comments below.

About Sam Quirke
Sam is capitalising on market irrationalities with several years of consistent gains and outperformance of both large cap and small cap indices via active management through a combination of long equity positions and long + short option positions.

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