Hey everyone, Ross Cameron here! If you aren’t familiar with day trading, it’s the practice of buying and selling stocks within the same day. It’s an exciting but challenging way to make money. To be successful, you need a solid foundation. Many beginners make mistakes that set them back. Today, let’s talk about what you need to know and the steps to get started on the right foot.

Common Mistakes of Beginner Traders

New traders often don’t have a strategy. They just jump in and make trades without a plan, which is a recipe for disaster. Emotional trading is another big mistake. Letting emotions guide decisions can lead to losses. Overtrading, or making too many trades, is common and harmful as well. The key is to avoid these pitfalls. Two books I enjoyed that helped me control my emotions are “Trade Mindfully” by Gary Dayton and “Quit” by Annie Duke. Also, check out my reading list here!

The Blessing and Curse of Trading

Trading can be tough. Many struggle to make even $10 a day at first. It’s not about being greedy; it’s about having a consistent set of rules. The blessing comes when you can make that $10 consistently. Scaling from $10 to $100 or even $200 a day is possible by increasing your share size. I started small but now trade with an average position of 10,000 shares (results not typical).

Five Steps to Start Day Trading

Step 1: Learning Basic Concepts

You need to know how to read candlestick charts, understand technical analysis, and interpret news. Learn about Level 2 data and the tape. This can seem like a lot, but it’s essential. Trading simulators are a great way to get hands-on experience without risking real money. Using a trading simulator helps you learn without the risk. Once you’re consistent in the simulator, you can start trading with real money but in small sizes. This approach lets you gain experience and manage emotions.

Step 2: Learning One Simple Strategy

Start with one strategy and master it. Trading many different strategies at once can lead to confusion and mixed results. For me, the first pullback pattern worked best. I watched for stocks showing strength, waited for a pullback, and then bought in on the first candle to make a new high.

Step 3: Practicing the Chosen Strategy

Practice in a simulator until you’re confident. Stick to your rules and focus on stocks that meet your criteria. Track your metrics, such as win rate and average gain, to see where you need to improve.

Step 4: Evaluating Metrics

Tracking your trades is crucial. Use Excel to log every trade, including the time, stock, entry and exit points, and your reasoning. Analyzing this data will help you see patterns and adjust your strategy. Compare your metrics with other successful traders to spot areas for improvement.

Step 5: Transitioning to Real Money Trading

Once you have consistent results in a simulator for several weeks, it’s time to switch to real money. Start small and gradually increase your position size. Make sure you’re comfortable with your strategy and have the discipline to follow it. Also, remember to not trade with any money you can’t afford to lose!

Additional Rookie Mistakes to Avoid

Don’t overinvest in expensive tools; start with the basics. Avoid relying on trade alert services. You need to learn to make your own decisions. Don’t wait for “hot” markets to start trading; learning in different market conditions builds a strong foundation.

Understanding risk is crucial. The money you use in a trade is a tool. Your risk should be the difference between your entry and your stop-loss point, not the entire amount you put in.

Final Thoughts

Day trading is tough but rewarding. Start by learning the basics, adopting a simple strategy, and practicing in a simulator. Track your metrics and make the transition to real money trading once you’re consistent. Remember, my results aren’t typical and trading carries risks. Stick with it, stay disciplined, and you’ll improve over time.

Check out my small account strategy here and consider becoming a member of Warrior Trading to learn more. If you found this helpful, subscribe to my YouTube channel for more trading tips. Happy trading!

Stay Connected

Warrior Trading was founded by Ross Cameron in 2012, and is now a thriving community of thousands of traders. You can learn more about joining the Warrior Trading community here.

Check out my new book, How To Day Trade: The Plain Truth.

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Disclaimer: The results shared are based on my personal trading experiences and are not typical. Trading involves significant risk, and past performance is not indicative of future results. Always practice in a simulator before trading with real money.