While a good trading strategy like a price action pattern can help you become a successful day trader, it may not be enough to keep things running smoothly in the long run. Many traders fail to understand that there is no room for fear in day trading. They let their fear keep them from executing a trade and never become the lucky trader they want to be.
Many traders are not confident about their entry and exit strategies. Some design strong entry and exit strategies but fail to follow through when the time comes. Below you’ll find a concise guide to identifying the best times to enter and exit a trade:
It’s relatively easy to enter a trade. You can enter types of trades in the market, namely long position and short position. The former refers to the purchase of an asset with the expectation that its price will rise and the latter refers to the sale of an asset with the intention of repurchasing it at a lower price.
Before you enter a trade, you must research the asset using price action and technical analysis. TradingView is an example of a technical analysis provider that can link to your online broker. Once you have done your research, you should carefully select the volume of the asset i.e. the number of the asset you want to buy or sell.
The final step is to use the buy and sell options to enter the market. However, you should only enter a trade when you understand the factors that affect the price of the asset so you know whether the price is right. You must also be psychologically ready when you enter a trade.
The right time to exit a trade is when you have achieved your profit target. When the trade reaches a certain price level, a stop-loss order is triggered and sent to the exchange for execution. As a day trader, you should exit a trade a few moments before the market closes to avoid the risks that take place overnight.
Traders do a lot of research, formulate their entry and exit strategies, and still fail to take action when the time comes. As the execution of some trades cannot wait, you can end up losing a lot of money if you hesitate to pull the trigger when the time comes.
To overcome your fear and increase your chances of earning a profit, pull the trigger on the trade when your entry point strikes. If you can’t fight this type of fear (FOMO), you can execute the trade via a limit order i.e. an order that restricts the maximum price to be paid or the minimum price to be received on an asset’s purchase or sale respectively.
If you constantly think about winning and losing, you will not be able to execute trades according to your well-designed strategies. You need to accept that you are participating in an odds game where you must be in control. Being overly concerned about doing it wrong will leave you nowhere. You must trust your analysis and pull the trigger.
