Archives for day trading mistakes

Here you will find archived content about day trading mistakes found throughout the website.

Huge Mistakes Made When Choosing a Day Trading System | Part Six

September 13, 2018 by tradersolution

Day Trading Education – Pitches that Win Now, Lose Overall

After a number of years in the trading industry, it’s difficult to avoid criticizing every little detail of various education systems. At a certain point, it seems as though you’ve heard it all in regards to companies selling their systems (and the questions that come from potential customers of said systems).

You even begin to see an almost political sense of loyalty begin to form between traders and THEIR system. Rarely does a trader admit, openly, to the flawed practices which they adopted at one point or another.

I recently heard a pitch so convincing that the educator didn’t even really sell an actual product. His system consisted of making live trades and explaining why certain decisions were being made and why.

Most “educators” who follow this model have 12-20 years of experience in trading and, as mentioned previously, cannot actually replicate their system because it made up mostly by personality traits instead of technical coding.

Day Trading Education – Buzzword: “Accuracy”

“Over 75 percent accuracy,” the salesman says. Your eyes light up as you wonder whether or not he’s telling the truth. Surprisingly, the answer is most likely yes.

But beware of the word “accuracy,” which will always be used as a tool in selling a system because of its ability to be manipulated.

For example, you may find systems that are only actually accurate 15 out of every 100 trades. These systems still claim higher percentages because their trade structure outweighs the 85 losing trades with the 15 winning trades.

The opposite can also be true. A system can be successful on 95 out of every 100 trades, but still lose money overall because the trade structure outweighs the 95 wins with the five losses.

After hearing the word “accuracy,” the best practice is to always make sure to see what the actual overall profit/loss is.

Day Trading Education – Buzzword: “Guarantee”

Another buzzword traders often hear as they research trading systems is “guarantee.” This is obviously in regards to pricing or satisfaction quality, as it is neither legal or ethical to make future guarantees on profits.

Again (just to be clear),there is only one type of establishment which can promise specific returns: federally regulated banks. Not one mutual fund, 401k, stock or trading account in existence can guarantee future profits.

Day Trading Education – The Total Rip Off

Occasionally a potential trader can come across a trading and education system that is a total and complete rip off. While this becomes more and more rare as time passes, it’s still a possibility.

In most cases, these systems promise huge profits on little effort from the trader. Money is exchanged, likely never to even be invested.

There are certain safeguards which are continually being put into place to help guard against this type of fraud, including federal laws requiring risk disclaimers on all trading websites and online entities. However, it’s still important to keep this in mind when searching for your system.

Day Trading Education – Beware of Salesperson

“Even a monkey could trade this,” is something a presenter might say while showing you a trade system demonstration. This may sound like they are trying to convince you, but in a sense, they could be right.

A study was conducted years ago involving a human and a monkey. Both sat in front of a computer and asked to trade for a specific duration of time. By the end of the experiment, the monkey had made more money than the human.

Obviously, results from the case above are rare, and should be taken lightly due to it being a single instance of the experiment. If it were run 1000 times, results would surely differ.

The main takeaway here is that education salespeople will do anything to make trading look easy, which the reality is that it simply is not. In certain cases, new traders can remain profitable for a short period of time, but that doesn’t mean their strategy is perfect.

A good thing to remember for new traders is to practice trade execution for a minimum of one month prior to increasing leverage and trading substantial funds.

Conclusion: Day Trading Education

In conclusion, day trading education is not something to take lightly. While many people learn and make a living day trading, others make their living by selling faulty and outdated education products. Here at Day Trade FEED, we’re doing our best to make sure everyone who is interested can learn to day trade without navigating all the tricks of the sales trade.

When choosing a day trading system, make sure to use the product as much as possible before paying for it. Do this by using free demonstrations, trial periods and other forms of test drives.

Remember, if an education system doesn’t allow you to try before investing, it may not be worth your time.

Trading is something that is difficult enough without trading platforms and software companies misleading you.

Find Day Trading Education Through DayTradeFEED.com!

This article is only part six in a series aimed at helping day traders understand what mistakes to avoid.

First Mistake: No Ongoing Support/Education

Second Mistake: No Specific Way To Replicate Results

Third Mistake: Repeating Key Entry and Exit Strategies

Fourth Mistake: Paying for Trading Seminars, Books & Videos

Fifth Mistake: Make Money Day Trading (System Not Compatible)

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Huge Mistakes Made When Choosing a Day Trading System | Part Five

September 6, 2018 by tradersolution

Mistake: Make Money Day Trading (System Not Compatible)

Make money day trading. Don’t kill profitability with a lack of funds.

Two things that have nothing to do with a trading system itself can affect trading in a significant way:

Liquidity
Market Being Traded

Some systems claim to see the same results regardless of liquidity or which market is being traded, but the only way for this to be true is for the trader to have a significant account funded from the beginning.

The truth is that profits are capped by these two principles in every market. On one hand, Forex market caps are traded in billions of dollars. In contrast, traders being capping out at around $5,000 in futures markets.

How to make money day trading, even with Forex caps.

Around $3 trillion is exchanged in Forex markets on a daily basis. Because of this, many traders will never have to worry about caps in terms of profitability. However, minimums balances do still exist, albeit usually at a relatively low rate.

Many brokers offer what is called a “micro account.” These allow traders to open a trading account for as little as five dollars. These offers usually charge more in spreads, but make trading available to just about anybody.

Typically, brokers prefer a normal account to start around $500. These accounts offer lower pip spreads, but keep in mind that profits are taken at the beginning by setting you however many pips behind your entry to pay the spread difference.

How to make money day trading, even with Futures caps.

The Futures market isn’t for everyone due to a required minimum standard balance set by the Commodity Futures Trading Commission (CFTC).

First, it’s important to remember that most brokers will not allow you to open an account with less than $5,000. In addition, contract margins can vary from $500 to $6,000 per contract traded. These parameters are set to prevent losses that traders aren’t able to cover.

The Futures market is also a little more unreliable in terms of liquidity. Take the S&P 500 vs. Silver Futures for example. The S&P involves many more traders, which means there is more opportunity in the market to make profits without “slippage.”

“Slippage” is defined as a change in price which occurs due to a lack of participant reaction instead of an abundance of it. When these markets slip and there isn’t enough traders participating, your trade must wait until the prices moves far enough to pull you out completely.

In turn, this can result in huge losses and/or little profit.

Conclusion: how to make money day trading.

In conclusion, while Futures markets remain a great place to trade, please make sure you have the correct knowledge and experience to correctly navigate the practice. A good place to start is to make sure you know about specific trade times and overnight margin requirements.

The best type of educator of trading system will already have direction on which market fits your individual financial situation and the leverage at which you should be trading.

How to make money day trading with DayTradeFEED.com!

This article is only part five in a series aimed at helping day traders understand what mistakes to avoid.

First Mistake: No Ongoing Support/Education

Second Mistake: No Specific Way To Replicate Results

Third Mistake: Repeating Key Entry and Exit Strategies

Fourth Mistake: Paying for Trading Seminars, Books & Videos

Subscribe below to be notified of future editions.

Huge Mistakes Made When Choosing a Day Trading System | Part 1

August 2, 2018 by tradersolution

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!