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Day trading is a very sought after profession. Many try, but few last. Why is that and what can be done for those who really want to overcome the barriers? There is no substitute for experience and being exposed to the daily market fluctuations that take place every day. Short cuts, to help speed up the process can be to find a sound trading method to build upon. This can cut down some of the learning curve for those who pursue this, but it is not the final answer. The individual trader is where the responsibility lies for success.

Every traders comes with different baggage from his past and many of those can be very negative and hidden deep within the subconscious. It is essential to know who you are and what limitations you may have from your past. Uncovering some of this first, will go a long way to overcoming your personal trading barriers.

Every trader needs to know what kind of trader they really are. If you try and trade a style that is not part of your stronger inner traits, you are not in sync with yourself and the markets. So, take time to examine that.

Me personally, I don’t like staying in a trade very long and look to exit on strength rather than on weakness. Knowing that ahead of time even as a scalp trader, I am lining up with my strength’s and the results are improved.

Being successful once you have a good idea of what to do and what you are looking for, is money management. Without this, you are going to suffer. I always try and measure how much is in the move, or where it is naturally and likely to move to. Then I try and underestimate that a bit to be sure I will get there.

The first part of the equation happens before you get into the trade, that would be trade selection. Knowing which trades to take and which ones to pass on is very important. This part is called discretionary trading and when combined with rules and principals to follow, is the best kind of trading with the best results. This would separate what is called a trading system from a trading method. Discretionary trading is putting everything you know about the market and its character to your advantage with a buy or sell signal.

Trading systems are not discriminatory, as they take signals from a predefined set of conditions automatically, putting you in the trade as those conditions are met. The problem is, if and when you hit a draw down, you are either going to keep trading it or stop. When you stop, that is the likely time that it will turn around and start to recover from its earlier losses, but without you. As you re-enter, thinking it is back on track, it then again starts to suffer draw downs and you are again underwater. This is frustrating for many traders I am sure. I never traded that way with a mechanical system but I do know the scenario’s that it plays out.

A trading method, is going to have discretionary trades to take and pass on. You need to interpret the current market conditions and see if they are favorable per your trading method conditions. If parts are missing, you are better off to pass. If the ingredients are all their, proceed and do not hesitate. This is the biggest difference between the two approaches.

To trade a method successfully, you really need to get comfortable with it and that is going to take time. To many traders rush into the trading pit and want to see what they can do. That is fine, but when the time is right. If you are going to go college for a degree, they don’t hand one out in 3 months and say thanks for coming. It is a long term venture of commitment, passion and desire what will take them to their goals. Becoming any professional is no minor operation, just the same as becoming a successful trader. It takes time to know how price reacts to different market conditions. You can jump start that, but their is no substitute for this. Those traders that have a years mindset, as a opposed to a weeks and months mindset, know that it is the truly committed who will persevere and overcome.

The other thing is having realistic weekly and monthly goals. As daytraders we strive to be profitable every day, but that is not always going to happen for sure. Shooting for a weekly and monthly profitability goal is more realistic. If you apply to much preasure on yourself in any one day that you are off, you will force trades and make mistakes trying to come back. If you have a daily loss limit, you always know ahead of time what is the worst thing that is going to happen this day. You don’t have to wait until your losses mount either, as if you are off, you can always stop before that threshold is reached. Having a weekly and monthly goal helps to release some of that market performance pressure. You always have tomorrow when market conditions are likely more favorable.

To recap; A trading method is better than a trading system, but it can be harder and take longer to master. The end results are improved performance and you maintaining control. Money management, a key to success. Without it, you will not make money. Take what the market gives easily and freely, and exit what becomes a struggle. Protecting profits and moving up your stops are a key part of that management.

Every trade starts out as a scalp for me, until the market proves itself. Scaling out is another key part of that trade management. Taking a small piece of that easy trade can allow you to stick around for the rest of the trade to develop into more without the fear of quickly giving it all back and the trade becoming a looser. All apart of trade and money management.

All of this comes with time and experience as you follow the markets. A few more things,  price always comes first. Be a student of “price” and see how indicators reflect that, not the other way around. Lastly, do not forget how time plays a very important role in all of this. “Time and Price go together”.

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No trading on Friday and today. There is something wrong with the price data at Trade Station. The tick charts are way off, posting like 5 times as many bars as normal. I don’t want to try and trade what I don’t understand, not worth it. It started from the afternoon session on Friday and has continued into today. Lets hope they fix it soon. Any comments from traders on this welcomed.