Preparation; the Life of a Day Trader

Day traders may observe a tremendous amount of activity during volatile times of trade but experience stability on other days. Hollywood movies have shown the public what trading is like in tough times, but the high adrenaline and confusion is often not an accurate portrayal.

Any day trader that has experienced the highs and lows of this profession knows that preparation is often a slower, and more meticulous task, that is crucial. Preparation before the markets even open separates successful and unsuccessful day traders.

A day trader usually does the majority of their trading during the daylight hours of a market (from 9am usually). However, a good trader will already have a strategy in place for the day ahead. Many broad considerations and predictions, based on regular and irregular financial statements, earnings, economic forecasts and news reports should be observed. The aim is to mitigate losses, or get some indications of quick increases in individual stocks, commodities or currencies, before the pressure of trade during the day begins.

Preparation should also include;

  • A consideration of how much can be risked on each trade. 1% to 2% is usually the recommended amount
  • A quick look at regular releases of valuable information on a calendar is advised so that an early exit can be made before the release of volatile data
  • A range of tools for market predictions including Multiple Time Frame Analysis (MFTA). This is a way of predicting possible increases or decreases, in stocks or any other type of trading

Successful day trading requires knowledge of the markets, and careful use of this information. Preparation for day trading is essential for all traders. This includes beginners, making low-risk trades with little information about the markets. Experienced day traders with a higher level of risk in their portfolio also benefit from preparation.