Thinking of online day trading? Don’t start before you read this post.
New investors who are eager to start day trading will most likely fail within the first few months, losing their entire savings by trading the wrong stocks, options and futures.
Here’s a startling fact: majority of people fail at trading when they first start out. Newcomers don’t spend the necessary time practicing trades on paper before they dive into online day trading world. These new investors lack the confidence and expertise to successfully pursue trading either as a part-time or full-time job.
So, what causes the newbies to fail? Basically, we can summarize it down to 3 reasons.
Not enough experience
This is a no-brainer, but quite possibly the most important one. If you decide to jump into the world of day trading and have not practiced before, then you are wasting your time. I would say trading on paper for at least a year with 10,000$ of play money is the way to go. When you are comfortable with your trades and are in the positives, then start trading with real money.
Trading with emotions
If you trade with your emotions, you are going to lose. The experts who dominate the online day trading world are emotionless and have a cold approach to trading. If you trade with anger and depression, you can kiss your money goodbye. You need to make decisions with logic and fact, and not with your heart or gut feelings.
Too much greed
When you start seeing the money rolling in, you’re going to want more and more. Greed is a good way to encourage people to make money, but it can also be one’s downfall. Charles Langford, who is a well-known day trader, always said to keep the greed in control. You should stick to one or two trades a day and call it quits. You need to be patient and let the money drip in slowly, or else you will start treating day trading as another form of gambling, which is not a good thing.
One of my latest interests today is day trading. A couple months ago, a good friend of mine who is a professional stock broker and trader recommended I look into day trading as a part-time “job”. I’m quoting the word job because the way I see it, it’s not your usual 9 to 5 setting. Day trading is something you can do on your free time, or alongside your usual everyday job (or career). You will, of course, require access to a computer with an internet connection.
One of the things that I tout on this site is passive income, so most of you are now saying “well, this isn’t exactly passive…” This is true, as you will have to be somewhat active when you execute your trades. Unlike buying stocks and “going long”, buying & selling stocks can take anywhere from minutes to hours within the same day. This method is called intra-day trading and is what I am currently doing.
If you have some extra money lying around in the bank and you rather have complete control over it, day trading is the way to go in my opinion. Rather than dump your money in a mutual fund that may or may not grow, trading will definitely give you some nice income.
On the topic of risk: yes, there is some risk involved, but it’s actually quite minimal if you know what you are doing. Day trading isn’t rocket science, but it does require some analysis on charts. The practice to analyze chart data is called “technical analysis” and it is something that everyone can do and master with a bit of practice. To further minimize risk, you can put “stops” on your trades: when a stock falls below your minimum, your trading system can automatically sell your equities and leave you with little losses.
In the upcoming weeks, I will be detailing my techniques and methods I have learned over the past few months that are working quite well for me. I will also go further into detail on how to start and what to do when it comes to day trading, along with the questions that most people ask when they first start. When I first started, I was completely lost, but my friend helped me get started on the right foot.
You’re probably wondering: “Oh no, not another make money blog!”
Before you close your browser window and run for the hills, I want to explain to you what this site’s mission and purpose is, and how I can help you become better informed in financial matters.
Okay, so what sets my site apart from the rest of them out there on the web? For starters, I’m like you: stuck in the rat race, wanting a way out of the corporate world. I want to be financially independent, and my opinion, the answer is passive income. Passive income is any kind of income that is generated on its own, such as owning real estate (i.e. apartment buildings) or stocks (dividends). You can sit back, relax, and know that next month, you will be receiving X amount of money thanks to assets that pay. Most people believe that owning their house or condo is an asset… I’m here to tell you otherwise. While I’m not at the stage of true financial independence yet, I can tell you that I have a good idea on how to get there efficiently.
My purpose is to inform the average Joe out there on topics relating to money: accumulation of wealth, strategies, understanding the basics of finance, tax sheltering your income, etc.
My mission is to further my knowledge in financial matters and to share them with the community. Hopefully as the days go on, I’ll be getting financially smarter and overtime, wealthier. The advice I plan to put on this site is the ones I use or plan on using.
I can summarize this site in two words: Money Education.