The word “daytrading” gives rise to all sorts of emotional reactions. People are either attracted to it or are revolted by it. Those who are drawn to it think of it as a desirable profession where income possibilities are limitless. I don’t blame them. It does have its charm, but boy, can it be painful! Parting with hard-earned money is never easy, but if you have that hunger to become successful at it, you have to work hard, persevere, focus, be committed, and most important, be extremely disciplined. It’s just like with any other activity, be it professional sports or academics. You have to start at the bottom and work your way up. With experience, and that includes making many mistakes, you will learn what works for you and be able to create strategies that are unique to you. Take the time to learn from others and combine different people’s styles and techniques to come up with your own strategy. But make sure that it’s your own unique strategy or style.
Think of some chess grandmasters such as Garry Kasparov, Sergey Vokarev, and Daniele Vocaturo, among others. They all have different styles of playing. Some may be offensive players, while others may be defensive. Some may apply complex strategies and some may be very unpredictable. Each player has a unique style that makes them successful.
Similarly, as a daytrader, you need to come up with a unique style that works for you. Although you can learn from others and combine various people’s styles or techniques to come up with your own, you’ll still encounter mistakes. But if you have that desire to be successful,you’ll learn from those mistakes.
Take Josh DiPietro, our Stocks & Commodities interview subject for the June 2010 issue, as an example. DiPietro is an extremely active trader who, instead of being discouraged by all his mistakes, chose to use them as learning opportunities. That’s what makes him the successful trader he is today. Not all of us may have that same type of personality or be able to handle trading the way he does. There are different ways to trade, and any method will work as long as it works for you. Finding what works for you is probably the biggest challenge you have to face.
A daytrader liquidates his or her position at the end of the trading day. The next day is another day with different challenges. The advantage of trading this way is that your risk of ruin is limited. Interestingly, Walter Downs’ article, “The Forex Gambit,” presents a risk management strategy that uses logic and analytical reasoning from math and the game of chess to apply to your trading. Read it straight from the chessmaster!
Jayanthi Gopalakrishnan, Editor