Mistake: No Ongoing Support/Education
To begin, think about what is going on in our current day. We live in an era where technology is advancing exponentially, and it seems, at times, as though computers are taking over the world.
But are computers REALLY taking over the world?
Foreign exchange (forex) markets recently saw a spike which caused the greatest change in the history of the Yen. Experts attributed this failure to robotic trading, which lost millions in the market due to faulty code.
This, along with countless other examples, show us that the human brain is more capable than even the most advanced computer in existence. And even when computers become more advanced than the brain (experts believe this to be only years from now), humankind still possesses something computers do not: the ability to evolve, adapt and change.
Day Trading System vs Robot Trading
Perhaps Charles Darwin said it best:
“It is not the strongest species that survive, nor the most intelligent, but the ones most responsive to change.”
Fortunately, the computer is not a living species, nor does it respond well to change.
A human mind would have stopped the execution of the trade or the continuation of losses. And just as the world witnessed during the aforementioned fall of the Yen, a robot could not.
What good is developing a trading tool or system if there is no continued education or support to follow? How does this help you increase your advantage by responding to change?
Adapting Your Day Trading System
When the market first began, certain candlestick patterns began to emerge. We know these patterns as Dojis, Hammers, Hangmans, etc. Traders that were able to recognize these patterns and understand how they’d affect the market moving forward were able to adapt and innovate old techniques to make millions.
The rule of supply and demand in economics is very clear: if something is profitable, demand for it will increase. If demand increases, supply decreases.
So, what does a trader do with their old, outdated system when it becomes less profitable? Some began their search for the next “golden goose,” while others refine their system with updated data and adapt to the circumstances now before them.
This is why continued education is critical to the success of traders. Today, there are still traders who use candlestick patterns when determining the best trades to make. The difference is this is not all that goes into their decision. The data from these patterns is combined with current market conditions and other trading strategies to form a more consistent, reliable system.
Is Your Day Trading System (Support/Education) Affordable?
Now, what if a trader uses an updated, elite system, but the infrastructure behind support and continuing education within that system is not affordable?
Unfortunately, this is a common trick of the trade. Many traders lose their first trade without even trading. How? By paying too much for the initial education and education materials to continue through the growing pains that come from learning to trade.
If a trader pays $3,500 for trade coaching, but their trading system only yields $4,000 per month, chances are the remaining $500 will be used to pay their broker.
Issue #2 With Some Day Trading Systems
Another issue many traders see is that they’ll lose money while they learn how to handle losing money.
There are a lot of trading businesses that shirk all accountability immediately following a student’s graduation from the program. So when a beginner starts to see a trade go upside down, they have nowhere to turn for assistance.
This lack of support causes many to panic and make rash, emotion-filled decisions while trading. Making these decisions can cause bad habits and practices to form.
This is why it is absolutely critical to make sure a trading program offers sufficient support and continued education before taking the plunge and joining.
Pulling the Trigger on a Day Trading System
In conclusion, ensuring these first two items (support system and continued education options) are integrated into the core of your trading system is absolutely essential. You may find a program that lacks in these areas, and it may be a challenge to walk away. But being confident in these areas will help you find success throughout your trading career.
In order to determine whether support and education moving forward will be sufficient, ask yourself if the education is actually education and not just information from past market trends. Many teachers and coaches will claim their continuing education to be worthwhile, when really it merely consists of ancient information from a past generation of traders.
To truly grow as a trader, continued education needs to be current, driven by live data, state-of-the-art and relevant to today’s markets. This means live webinars, online meetings, etc. While older strategy and information can still be relevant, updating their trading system is necessary to stay profitable as market conditions shift and evolve.
How to Know if You Have a Good Day Trading System
This article is only part one in a series aimed at helping day traders understand what mistakes to avoid. If you’d like to be notified when future articles like this are published, subscribe below.
Until future parts are released, check out our Should I Day Trade? and Introduction pages.
Have a question about choosing a day trading system, continued support/education or just day trading in general? Contact us!