Many beginners who start trading stocks expect success overnight. However, you need to remember day trading success is a marathon, not a sprint. When you’re first starting to learn about day trading, your goal should be to stay in the game long enough so you can gain experience and learn over time. Let’s take a look at how you can achieve day trading success. Again, you need to keep in mind success in day trading won’t happen overnight.
How to Become a Successful Day Trader
- Don’t give up if you don’t have instant success day trading
- Define your edge
- Learn from experienced traders and put in the hours to gain your own experience
- Trade with a community at the beginning to learn quickly
- Practice planning out your trading plan
- Execute your trades
- Review your trades by journaling successes and failures
- Trade with other successful traders
- Ask a successful day trader to be your mentor
- Learn from yours and others’ mistakes
Day Trading Success Doesn’t Happen Overnight
When you take the first step in day trading, you should understand some tips and tricks to potentially increase your staying power in the business. Now, if you want to achieve day trading success, you need to approach it with grit. That means you should not give up if you have losers or a string of bad trades. Rather, you should seek for help and learn from your mistakes, as well as others’ mistakes.
Defining Your Edge
When you’re first learning how to day trade, you need to define your edge. It may take you some time to figure out what your edge is, but once you figure out your edge, you should be able to achieve day trading success over time. Remember, you probably won’t define what your edge is within a few weeks. If you do, that’s great. However, it could take you a few months or more to figure out your edge.
For example, Jason Bond was lucky enough to define his edge fairly quickly. He found that his strong suit was in penny stocks that had huge moves and pulled back. Moreover, he found what technical indicators work well when trading penny stocks.
Once you’ve defined your edge, you could start looking for other ways to potentially make money. Here’s a look at one of Jason Bond’s options trades.
Similarly, Kyle Dennis defined his edge early. He understood how to trade biotechs and got really good at systematically trading stocks in the sector. Not only that, once he found his edge, he continued his education and is branching out to options now. He’s a great example of a successful day trader.
Put in the Hours to Achieve Day Trading Success
Now, you’ve probably heard about the 10,000-hour rule. You might not need to actually spend at least 10,000 hours to become a successful day trader. One thing to keep in mind is that it takes time to be successful at day trading. If you’re able to learn from experienced traders and trade with a community, you could potentially shorten the learning curve. It helps a lot to learn from others’ mistakes, in addition to your own.
Not only do you need to practice planning out your trades and executing the plan, you also need to review your trades. If you just trade and don’t review your trades, you probably won’t get better over time.
When you plan your trades, it becomes a lot easier to journal. For example, here’s a look at some of Kyle’s trading plans.
Catalyst Dates: FDA Approval date of October 4th with an Advisory
Committee Meeting scheduled for August 8
Buy Zone: 10.50 to 11.00
Profit Zone: 12.50 or higher
Stop Zone: 9.75
Catalyst Dates: Phase 2 data due in 3rd Quarter
Buy Zone: 74.00 to 76.00
Profit Zone: 83.00 or higher
Stop Zone: 70.00
If he finds that he didn’t stick to his plan, he’ll journal that and then review what he did right and wrong. Basically, if you just trade and don’t review your mistakes and what you did right, it’s going to be hard to be a successful day trader.
Day Trading Success: Trade with Successful Traders
One Wall Street saying goes like this, “Success breeds success.” If you learn to trade from successful traders, you could increase your probability of success. The last thing you want to do is trade alone because no one is there to help you along the way. However, when you have mentors who have experience day and swing trading, they could answer any questions you have. Moreover, you could lean on a community of traders and potentially increase your profits over time.
Similar to the 10,000-hour rule, where Malcolm Gladwell picked the brains of successful people like Bill Gates, you could do the same with successful traders. You could ask traders in the community and your mentors about their high-probability setups, as well as their thoughts on your trades.
Final Thoughts – Day Trading Success
We can’t stress this enough at Raging Bull: Day trading success doesn’t happen overnight. If you don’t become successful in a short period of time, don’t be bummed out. If you’re serious about becoming a successful day trader, you need to approach this with patience and grit. That said, you should learn to define your edge, review your trades and trade with other successful traders.