Trading is similar to mathematics. Learning and understanding are not linear; they are like moving to a new level.
And when you reach this new level of knowledge and look back, it is hard to see how it was not obvious to you before.
This post is based on my knowledge or level right now.
And like the rest of you, I do not know what I do not know.
Still, I wish I had known and understood the following five principles when I started day trading.
At this moment, I cannot see how they will ever change.
But I also know that I do not know what I do not know.
5 things i wish I had known when I started day trading
1. Keep it simple
The market is a simple thing. But that does not make day trading easy.
The market can go up, down or move sideways.
This is not complicated.
Guessing should give you a 33% chance of being right at any given moment.
Will adding five indicators you do not understand to your chart make it simpler to master trading? Will it improve your edge?
I do not think it does.
I only use two moving averages.
You have to find the model that works for you.
But at least consider that the answer may not be to add more complexity to a marketplace that is, in essence, rather simplistic.
2. Have a plan: Act – never react
Before the market opens, I plan to go long, short, or simply wait it out.
I have a plan for all eventualities.
And the market will show me what my play will be.
Having a plan allows me to take action. There are no emotions involved.
I take the trade when I see what I look for in the chart.
At that point, I know when to take my profit and when to exit with a loss.
This is a good trade for me, even if I exit with a loss.
Why?
Because I followed my plan, and I know I have an edge over time as long as I follow my rules.
3. Protect your Capitals (plural)
I should never trade ad hoc. I need to follow my trading plan.
If I see an ad hoc setup I want to take, I need to examine it more closely and determine whether it is valid. If it is, I should enter it into my trading plan.
This is important as I need to protect my mental capital — my willingness to act when I have an edge.
Ad hoc trades that go against me will chip away at my mental capital. This may cause me to hesitate when I should act.
Ad hoc trades that do well will make me even more willing to take trades that look or feel “right.” Successful trading is rigid and boring. There are no emotions or excitement.
There are only trades that should be taken or avoided according to my trading plan.
This is closely connected to protecting my trading capital, the funds I have available to trade.
I never risk more than 2% of my capital in one trade.
And yes, this is written in my trading plan.
4. Patience, patience and patience
Patience is a challenge for me.
And I work on being patient every day and in every trade.
Waiting for setups to appear, staying in the trade, not fidgeting with levels, avoiding ad-hoc trades, waiting for bars to close, and so on.
To date, this is the hardest task I have faced.
I wish I had known that it is better to miss an opportunity than to lose money.
5. Beware the Heroes Trading from the left
Reading the chart in real time is all about probabilities.
At any given time, the price can go up or down or consolidate at the present level.
And guess what? No one knows.
Day trading is a game of probabilities where patterns, previous behaviour, news, pain, and expectations create scenarios that are likely to occur.
There is no such thing as a foolproof trading system.
No indicator or trading system will work every single time.
The trick is to trade with an edge and win bigger than you lose.
So, please do your due diligence before adopting ideas reported to work when you watch YouTube videos or read posts about foolproof systems.
When we look back at the charts, trades are easy to spot. This also makes making a video about a setup that worked for a specific period easy. But it does not necessarily tell you anything about the future.
Summing it all up
Most traders must spend many hours in the market before they succeed.
And my best advice to anyone interested in day trading is twofold.
- Record and analyse all trades – this is the only way you will see what works over time
- Start with a demo account—expect to lose before you win. A demo account will help you learn about the market and yourself before you risk any of your money.
