Then again, you could take a year or so and read every available text on day trading and then put together a system, back test it, trade it on a demo, and see if it works. Crazy as it sounds, I have done this on several occasions with day trading systems I have designed. It is a lot of work, but you get to know an awful lot about the ins and outs of day trading systems and the computer programming that goes into a day trading system.

So you are left with two very challenging approaches to day trading; you can spend a ton of cash on one or more day trading systems and eventually find one that suits your needs; or you can spend a ton of time monkeying with oscillators and indicators and price action, find a program that can back test the system design and see if it works. If your day trading system doesn’t work, it’s back to the drawing board. Neither one of the choices sounds very enticing, nor is either choice glamorous. They both entail a lot of hard work and money.

There are several skills that must be mastered in order to become a successful and profitable day trader. I would place your trading system near the top of the list of important items to learn. Of course, there are other very important skills that go into it day trading; like money management, psychological and emotional control, and mastering the software you will use to trade futures contracts. But you must have a system for trading, and the system must work, and you must feel comfortable and confident when you trade the system. It is nearly impossible to day trade successfully when you do not trust your trading system methodology.

There are several systems which are successful and reliable that are free for the asking on the Internet. One in particular is especially good. (Due to conflicts of interest and article marketing rules I won’t be able to name the specific system, but it shouldn’t be hard to find because it is very popular) The problem with overly popular systems is the herd mentality of the followers of the system. Often times, followers of these popular trading methodologies tend to pile into trades at an alarming rate and volume due to the sheer popularity of the system itself. No, my personality does not allow me to be part of a herd mentality system of trading.

So when choosing a system a day trader needs to be mindful of exactly what day trading methodology is being employed. A casual perusal of the available day trading systems will bring to light a number of different styles of trading. If it were me, I would trade a system that has gotten favorable reviews on the chat boards and is within the mainstream of current day trading methodology. I should warn you, there are a number of odd day trading system designers out there and they promote systems that truly border on the bizarre. For instance, one very famous technical trader is currently promoting a system based upon astrology. There are other systems based on biorhythms, the weather, and just about any other odd occurrence you might be able to dream up. As I said at the beginning of this paragraph, stick with a system that is in the mainstream of day trading thinking and master that system. You should know your trading system top to bottom, inside and out; you need to be able to execute your system without thinking, it should be second nature.

I did mention earlier that you could self-education yourself and design your own trading system. I don’t seriously recommend this option, because you are likely to burn through several trading accounts before you settle on a system that truly works for you. In short, self educating your self is generally a very expensive proposition. On the other hand, you will know much more about day trading systems than the average trader. I designed several systems after I had settled on a system I learned at a major investment brokerage house. I do believe that working with some of my own trading ideas was a great idea, as it gave me some real insight into how systems for day trading are designed and implemented.

In short, you have two options from which to choose and I highly recommend investing in a trading system and mastering the system. I also recommended that the system that you settle on is within the mainstream of day trading methodology and comes with some favorable recommendations from third-party sources.

Author: David S. Adams
Article Source: EzineArticles.com
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Is it true?

Well, in a certain sense the stories are true. As a long-time trader, I have seen more than my share of day traders lose all of their money and been forced to leave the profession. Sometimes these individuals have left high paying jobs to day trade full time and are forced to re-enter the workforce under-employed, or at least at jobs that pay considerably less than the jobs they left to day trade.

Why?

There are many reasons individuals fail trading, and it’s not because the day traders are less-than-intelligent people. There have been several articles written in recent years concerning the failure of day traders, and most point to the emotional aspect of maintaining a proper trading perspective. All to often traders abandon great systems of trading and take unacceptable amounts of risk in hopes of hitting “the big one.” Trading on emotion is the recipe of certain failure in day trading.

Why do rational traders sometimes act irrationally?

One of the toughest tenets of trading to accept is that certain trades are going to be losers. No trading system or methodology can assure that every trade is going to attain success. The market just doesn’t work that way. My personal philosophy is to never risk more than 5% of my money on any given trade and have target profit limits set and stops loss orders in place in case my trade goes sour. I never ride a trade down in hopes of it turning around. I never “double down”. Quite simply, if a trade doesn’t work the way I expected, I cut my losses and move on to look for another trade set up that looks appealing.

Failure is an unpleasant aspect of trading, yet every trader fails in one trade, or more, throughout the course of the trading day. Further, it is common to see traders increase their lot size if they are having a bad day in an effort to “catch up” to their trading expectations.

These are all part of the undisciplined traders emotional make up and are symptoms that doom a trader to failure. There are days when I make two or three clunker trades and decide to turn the computer off. Either the market is acting in a way that is not conducive to my style of trading or I am trading poorly, I never try to over analyze the reasons for my failure. I only know that on a given day my results are unsatisfactory and the best thing I can do is go golfing.

The emotional side of trading is the least studied and most poorly understood aspect of trading. Many traders spend thousands of dollars learning trading technique and complicated systems of trading, yet fail to conquer the emotional side of trade. The emotional side of trading is fairly simple, albeit very difficult to master, and is to simply not allow emotions to enter into your trading psychology. Sounds easy, doesn’t it?

It’s far from easy, and I can tell you that I have fallen victim to my own emotions on numerous trades. I know that any time I feel like I know what the market is going to do and become convinced that a trade “must” work…I am in deep trouble because the maxim “the market is always right” is important to understand. The only variable that can be wrong when you trade is YOU.

The chaotic nature of markets causes many inefficiencies in market pricing that can come into play at random times. If you are in a trade when these market inefficiencies come into play, you lose. It is really that simple and a smart trader exits his trade, takes his losses and moves on.

The study of emotions in trading is fairly new and several books have been written on the topic, I recommend “The Psychology of Trading”, by Laura Sether and Russell Wasendorf. (Note: I have no financial relationship with the authors) as a good starting point. A Google search will also turn up hundred of articles on this topic.

Learn to control your emotions and execute the your trading systems and you will have great results.

Author: David S. Adams
Article Source: EzineArticles.com
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