Everybody is talking about how much money you can make and how x day trading influencer become rich day trading GameStop back in 2021. And it’s totally ok, you actually can make a lot of money day trading, is well known that many people make like $300 per day trading futures. But what they don’t tell you is one of the biggest issues day traders face (at least at the beginning), which is losing money.
The reality is that most traders lose money on the market. And to avoid the struggle of consecutive red days. I have come up with some of the major reasons why do day traders lose money at the beginning of their journey and how to avoid it.
One of the major reasons for losses on trading is lack of knowledge and hype, why? There are too many people avoiding the necessary learning curve day trading needs to be profitable. And they are avoiding something as fundamental as backtesting strategies or practicing. This leads to an inevitable loss of money on the markets.
Red days in day trading are unavoidable, and it will happen. But day trading is more about reducing losses than making money. In fact, the better you are at reducing losses, the more profit you’ll have. And being prepared is one of the best weapons a day trader can have.
Some people say that you will get profitable after a year of trading constantly. But fortunately, we have trading demo accounts, and you can spend this year doing paper trader, without real money. After a year of practice, you can happily start going live on the markets.
The how to avoid red days in day trading is directly connected to the reasons why people are losing money on the markets, as you can imagine. And the better you avoid those mistakes the close you’ll be to making profits trading. So, let’s start tackling down those day trading issues.
When you talk with an amateur trader that just lost a huge amount of money day trading, the first thing you’ll notice is the absence of knowledge. They just jump to the market without even learning the basics, and that’s gambling. So, to avoid this situation, you should start learning the basics.
So, how to get the knowledge
A good point of getting a lot of knowledge is by participating as much as you can in the environment. Get yourself into it!
There’s not a better way to learn than doing, right? After getting the knowledge, you’ll want to jump into the markets. But don’t let the hype take over you. Do your first trades on a paper account, there are a ton out there. Test your knowledge, and keep learning. You sure will be making some mistakes, and there’s not a better way to keep learning than from mistakes.
Practice until you find something that works for you, a strategy, or something like that. You’ll find yourself comfier this way. After all, the more you practice, the more you get to know the market.
Tip: Usually, charts tend to re-visit previous prices. Know your chart like the back of your hand.
After learning and practicing a lot, you’ll find that the market is driven by some patterns (and I’m not talking about price action patterns). Depending on the market you’re trading on, there will be some things to take into account while trading, like the news and market behavior.
Rules are pro traders’ best friends, they can reduce a lot of the losses you can have while trading.
Of course, this is just an example, trading rules are personal, and you should find yours. Rules can be as simple and complex as you want.
That’s it! You’re all set to start your trading journey on the right foot. Avoid the biggest issue day traders have at the beginning, reduce your losses as much as you can, and you’ll be closer to huge profits. Day trading can be highly rewarding, but you can’t take shortcuts, it takes time and knowledge to master it.