Learning
Create an Online Day Trading Routine to Avoid Mistakes
Day trading can be stressful, and mistakes are often inevitable. Use our recommendations to prevent typical errors which too many traders make.
In Thailand, online day trading is booming. International brokers give access to various instruments, from currencies to derivatives. All of them can bringAdd New profit when traded wisely. Still, mistakes are inevitable. Even professionals can be wrong at times.
Fortunately, there are ways to prevent erroneous decisions. A lot depends on your mindset and attitude to the job. Here are a few essential tips for the everyday trader, regardless of their instruments.
Keep Track of Big News
Important economic and political events can drive market prices in different directions. Avoid trading in the first minutes following big news. They may create slippage on stop-loss orders, which means you may get unexpected results. This is why the economic calendar is extremely handy.
Check the calendar daily before starting work. Currency traders can check DailyFX and use embedded features of MetaTrader 4 or 5. Their stock trading peers can find the necessary data on Bloomberg. Whichever instrument you prefer, have an event calendar at hand.
Corporate earnings reports can have a dramatic effect on stock prices. Generally, it is recommended you refrain from trading on the day of such announcements. Trading before them could result in a loss. Check the Yahoo! Finance earning calendar.
Start Your Platform
Online traders depend on their equipment. Start your terminal and check that everything works. Are streaming quotes accurate? Bugs or delays result in trading errors.
Account and Contract
Popular systems like MetaTrader 5 allow you to work with several accounts. Make sure you are using the right one. Some users spend hours trading with passion – only to discover that all their profit was virtual. Use the demo mode for simulated conditions, and live trading account for the real deal.
Futures traders should also check their volumes. They need to make sure the contract size is right. It is also vital to consider the expiry date on the traded instruments.
Notes to Self
Leave reminders to yourself, so you do not miss important news releases. It is easy to forget about them in the midst of hectic trading activity. This mistake can be expensive. If an event occurs later on the same day, note down the expected time, and make sure it is in front of you.
Check Automated Aids
MetaTrader users should set Stop Loss and Take Profit for every position. These tools prevent excessive losses on failed trades and allow you to collect the desired level of returns. Make sure these values are set properly.
If you use scripts, an Expert Advisor or Forex robot, triple check all settings before launching them. EAs are pieces of software that can be added to MetaTrader. Free MT4 download is available from the Forextime website.
Check Position Size
The position size can be adjusted manually. If you stick to the default setting, make sure it is correct. A single extra or missing digit could be disastrous. In the first case, you could make an excessive loss on a bad trade. In the second case, you will only be trading a fraction of your planned size.
Be careful with manual adjustment. Write down your initial account balance. Double-check your entry point and stop loss.
Remember that position size determines the level of risk you take on. Generally, traders should not go above 1% of their account capital on each trade. For example, if you have $50,000 in your account, you can only afford to risk $500. Create a reminder if necessary.
Use a Trading Journal
Every day, make notes in a journal. Keep detailed records of your failures, so you can learn lessons and improve your strategy. Review those trading thoughts regularly. Analyze problematic tendencies and think of ways to cope with them.
Market Conditions
Start each day with pre-market analysis. How does the market look? Is it calm or turbulent? Are there any special patterns or trends? This research will help you take the right path once the market opens. For instance, volatile conditions could move your target profit upwards.
Time to Stop
You may notice that failures occur during some typical segments of the trading day. For example, those who trade U.S. stocks may start losing around the New York lunch hour. If this is the case, write a note to yourself or set an alarm, so you stop trading immediately.
Start with the Right Mindset
These tips will help you trade mindfully. Be meticulous with your pre-market research, double-check all settings, and know when to stop. This way, you can avoid preventable losses. Keep these thoughts in mind the next time you start trading. Follow your plan, be alert, and seize lucrative opportunities.
