Trading for wealth or trading for a living

The last few years have destroyed lots of fortunes. That count for both traders building wealth and traders trading for a living

Traders having built fortunes have lost it again.

The worst examples are the traders who invested for borrowed money – especially if they at the same time have gambled with currencies, they take a loan in Swiss Franc, buy a lot of stocks in the financial sector — and then what happens !

The stocks, especially i the financial sector, fall drastically and the Swiss Franc increases, and this, in some countries, even get worse as in some of the countries the taxation system is constructed in the way that you pay tax of non realized gains but can only deduct loss in future gains. So in fact they might have paid heavy tax for non realized gains just before the financial crisis, the crisis came, their assets fell drastically, their loans increased drastically both due to the currency and due to rising interests – so all in all CATASTROPHIC.

Ok did all then fall in that trap – no we have also seen a lot of traders being able to gain money. They have either been wise guys, extremely lucky guys, or they have had some kind of systems – for example trading indicator software like the daily pip avalanche software - or maybe insider knowledge (which off course is illegal). Furthermore during the crisis a lot of clever and wealthy investors have been able to collect substantial portfolios for future wealth, and somehow even if we as human beings think that this is exploiting people who have had misfortunes, it helps turning the wheels, as if they didn’t buy – ok yeah at extraordinary low price – the whole thing would stop, and the crisis would be even worse.

The lesson – I think – to learn is, don’t panic – buy what you can afford now and help the whole society  to speed up again. Cash savings – not only it doesn’t help, it also gives a ridiculous low interest, so in fact if someone wants to have cash savings – hide it under the pillow.

First, what is day trading? Day trading means the practice of buying and selling financial instruments (such as shares, futures, options, etc.) in order to obtain profit in the same trading day. People participating in day trading are called active traders or day traders.

Day trading, like any other business professions, requires in-depth training, proper planning and a lot of practice. Thousands of beginners will enter a trading day in hopes of making easy money. However, only the few of those who are well educated, have a solid trading plan, and the discipline will prosper in this business. Many of them are making thousands of dollars a day, trading only a couple of hours, and spend the rest of the day free with family and friends, doing what they love to do.

But how does one become a successful trader and make real money in this market? Take a look at this article and you will find out:

Step 1. We have to get a solid understanding in the financial market. We have to learn what financial instruments are available in the market as traders need the instrument that suits them the best. Secondly, we must become familiar with day trading strategies and try to find one that we like and understand the best. Search engines like Google and Yahoo are good places to find good trading courses and strategies. We will need to conduct our research in depth and use our judgment to find what suits us the best. We must also find the right trading tools such as market research tools, real-time trading software, and sign up with a discount broker that we trust.

Step 2. Once we have chosen our trading strategy, the next step is to write a trading plan. Yes, we need to put our trading plan on paper. In this trading plan, we need to write down our goals-what we want to achieve by day trading. What are your goals in the short and long term? Do we want to get a little extra income in addition to our day job, or do we want to become financially independent by day trading? We should also write a detailed plan for the trading activities every day, which includes pre-market studies, our entry and exit strategy, and our tasks aftermarket.

Step 3. Establish a paper trading account. Once we have drawn up our trading plan, we should test the water with paper trading or trading simulation. This is very important because we do not want to risk real money before we have a good understanding of the game. There are a lot of trading simulators available for free in the market, or we can see if our stock broker provides a real-time simulation platform for trading. When we run a simulation, we should try to think of ourselves as using real money and act according to our trading plans.

Step 4. Set a daily limit, both for profit and loss. Once we have built up confidence in day trading, we should try to trade once or twice a week with real money. It is important to set a daily limit for both gains and losses. For example, we can set a profit target of $ 200 daily, and a loss limit of $ 100. When we reached either limit, we should stop trading. Turn off the computer and go take a walk or have a cup of tea. Do not over trade.

Step 5. Have a system of good money management in place. Before entering each trade, we must analyze the worst thing that could happen. How much can we afford to lose on each trade if we happen to lose in every trade we’ve entered for the day? Knowing our maximum affordable loss for each trade is important because we will then deliberately limit the size of our position for the trade and set our stop-loss even before our enter the trade. This prevents us from losing a lot of money and helps us stay in the game.

Step 6. Fix our emotion problems by writing a trading logs. For day traders, keeping our emotions under control is a major challenge and need lots of disciple and practice. Every day, we can be distracted by various emotions such as fear, pride, ego, etc. These emotions will prevent us from following our trading plan and eventually deteriorate our confidence. An effective way to solve this problem is to write journals on a daily basis. When writing them, we should analyze each part of the trade, and document the logic or emotion behind the trade. When we see ourselves falling into the trap of emotions, we must remind ourselves not to make the same mistake next time. With practice, we can train our minds to follow our logic and keep our emotions to ourselves.

Step 7 Rewards ourselves when we adhere to our rules. When we follow our strategy or trading plan to the letter, regardless of winning or losing trade, we must give ourselves a big pat on the back, because we have conquered our feelings and made a great leap towards day trading success and financial freedom. Once we have achieved our objectives in the short term, we must not forget to reward our hard work and achievements. Whether it’s a trip to Las Vegas or a cool iPad, put the reward in our trading plan, which will motivate us to achieve our goals. In the end, we deserve it anyway.

For more in-depth information about how to make money day trading, please visit http://www.daytradingbusiness.net.

Lizzie Liang is a full time day trader and part time writer and blogger. Her blog http://www.daytradingbusiness.net provides day trading articles and tutorials for beginning day traders. Daily updates on trading systems, technical analysis indicators, trading patterns, stock picking strategies, and money management are all covered in detail.

One of the things that you need to make sure is choose the right indicators. Without the right set of indicators it is highly likely that you would consistently be picking the wrong stocks to invest in and that in turn would make your loses more than your profits.

Choosing your own indicators makes trading an easy process. Day trading indicators can help you add or reduce the impact of other traders at a particular point in time. Unless or until you are familiar with the techniques that other traders use you are not going to do well in the market. In order to be able to know about these techniques you need to be familiar with how the trade market works and what different types of day trading indicators to choose from. One way to increase the knowledge about the market is to study as much as you can from the material available in the market.

You need to have a system that caters to your needs. You may come across information that is good for somebody else but not for you. This usually happens because your tools and day trading indictors would work different in your system as compared to the systems of other people. In order to be successful in this trading, you need to be able to earn consistent level of profit. If someone or you have made profits few times it does not indicate that you are using a reliable day trading indicators. Therefore, consistent money should be the main evaluation point for you.

Developing your strategy with testing will help to perform well in business. You need to closely monitor your stocks. What this helps is in that it allows you to make decisions about selling or buying the stock which you are interested in. Humans show emotions and that can sometime lead to illogical decisions. One way to overcome this problem is by setting limits on the stocks prices and on that you decide whether to buy the stock or sell it.

Another method by which you can trade stocks is by keeping it for a long period of time. This would allow you to gain from the averages and bring profit to your stock. However, there is a chance that if the stocks prices fall rapidly you might lose your whole investment. But that is a chance which you are willing to take because all you are doing is that buying the stock and keeping it for a long period of time without actually making out money on daily basis or even weekly. There is lot of traders out there whose advice with respect to day trading indicators is valuable and if you follow that you will do well in the market. One thing that you need to do is research. It is your investment therefore you need to put your time and effort in analyzing the market, the company you want to invest and the day trading indicators that you want to use before actually investing in the stocks.

ProIndicators.com is providing high precision TradeStation. Day trading indicators can help you add or reduce the impact of other traders at a particular point in time.