Unlike other types of stock trading and investing, day trading involves holding securities for only one day. Day trading is a great career option — for the right person in the right circumstances. Being a successful day trader requires certain personality traits like discipline and decisiveness, as well as a financial cushion and personal support systems to help you through the tough times.
Think you have what it takes to go into business for yourself as a day trader? See how many of these characteristics apply to you:. Day traders maintain strict discipline about how they approach their trading day and what they do during market hours. Most day traders work at home, alone. If being in charge of your own business and your own trading account sounds exciting, then day trading might be a good career option for you.
Traders have to have act quickly when they see a buy or sell opportunity. Can you make a decision and act on it? Can you assimilate information quickly into a good strategy? If you screw up, do you figure out what you did wrong? If so, you have the basic personality of a good day trader. Good day traders are persistent. After they find a strategy that they trust, they stick with it.
Interest in the markets. If you watch the business news for fun and have been following the securities business for years, you might be a good candidate for day trading. An understanding of the cycles and systems that drive securities prices will give you a foundation on which you can build.
And that will give you a base to work from. Knowledge of trading systems. It can take a long time to find a strategy that works enough of the time to make it worth your while. Can afford to lose money. Be sure to set aside enough money to cover your living expenses while you get started. Has a strong support system. The markets gyrate with news events that no one can foresee.
Good day traders are psychologically strong. They have people and activities in their lives that help give their brains a break from trading, ranging from regular exercise routines to good friends to hobbies. Here are some good Web sites for Canadian day traders, offering day trading strategies, along with techniques and ideas on managing risk, taxes, and stress:.
He updates his blog daily and has a plethora of interesting charts, economic commentary, and tips on how to trade stocks. IndexArb lists the premiums on different contracts, offers strategies for different market conditions, and gives you some good background information to help you make your own decisions. MyPivots is of most interest to people working with eMini index futures.
Trader Mike , day trader Michael Seneadza , frequently updates his thought-provoking blog. It includes his trading journal, thoughts on the markets, and his own advice on day trading, which he admits is not definitive. Facebook has brought together like-minded individuals who share their thoughts and ideas on day trading. Here are a couple good ones to start out with:. Day Trading — Options Trading. Forex, Commodity, Index, Stocks. Twitter is home to many interesting traders and investment professionals who are worth following, including.
Jeff Pierce — author of Zen Trader. Mike Jackson — This Canadian bond trader tweets about bonds and other economic insights. Jeremy Korpela — Korpela is a Calgary-based swing trader who posts his thoughts on the markets. Day trading is tough. Most day traders lose money, in part because they make obvious, avoidable mistakes. Following them is no guarantee that you will make money trading, but it will certainly reduce your risk and improve your odds of being a day trading success in Canada.
Starting with unrealistic expectations. Some research shows that 80 percent of day traders wash out in the first year. Yes, some traders make a lot of money. But they are the exception. Starting without a business plan. Successful businesses have business plans, and your trading business is no different. You need to specify what you are going to trade, and when, and how, and with how much money, before you get started.
You need to determine what equipment you need, what services and training you want, and how you will measure your success. Having the plan will keep your expectations in line and create a professional starting point for your new trading venture. Starting without a trading plan. A business plan sets the framework for your trading business, but you need to fill in the details. How are you going to trade? What signals will you watch for? Why will you enter a position, and why will you close it?
Good traders have trading plans, so that they know exactly what they will do as they see opportunities in the market. This reduces the fear and doubt that can unsettle most traders and it heads off the panic that destroys more than a few. Failing to manage risk. Even traders who stick with it have many losing trades. Their trading plans include stops , which automatically execute buy or sell orders when securities reach predetermined levels.
They also have a money management system so that they risk their capital appropriately. Not committing the time and money to do it right. To do well, you need to set regular hours and have enough money to generate reasonable returns without unreasonable risks. If you have days of losses, a small account will quickly end up with too little money to meet minimum order sizes. If you have more money to begin with, the dollars you make from day trading will seem more real to you.
Some Canadian brokers follow the U. Characteristics and Personality Traits of a Good Day Trader Day trading is a great career option — for the right person in the right circumstances. See how many of these characteristics apply to you: Internet Resources for Day Traders in Canada Here are some good Web sites for Canadian day traders, offering day trading strategies, along with techniques and ideas on managing risk, taxes, and stress: Here are a couple good ones to start out with: Forex, Commodity, Index, Stocks Twitter is home to many interesting traders and investment professionals who are worth following, including Jeff Pierce — author of Zen Trader Mike Jackson — This Canadian bond trader tweets about bonds and other economic insights.
Common Day Trading Mistakes Day trading is tough.More...