7 Steps To Daytrading

Day trading is not easy.  These 7 steps are not
designed to give you a fool-proof, easy trading system that will always make you
money.  If there were 7 such steps, day trading would be easy and we would
all be millionaires.  Instead, use these steps to frame your own plan of
attack and your own strategies because after all, YOU are the one with money on
the table. 


1. Save money.  Before you can begin to trade at all, you
must accumulate enough money to trade.  Have a financial cushion.  It’s
impossible to trade successfully with your last dollar.  When bankruptcy and
insolvency are staring you in the face, the pressure to trade correctly is


2. Get the right equipment. In order to trade
competitively, you need a computer, a trading platform, and a solid connection
to the internet.  As technology becomes more and more advanced, traders will
need faster and better tools to keep up with traders in the pit and off floor
professionals with state of the art computer technology.
Tradestation and
ETrade are both widely-used platforms.


3. Open a trading account.  In day trading the cheapest
firm is not always the best.  Make sure that you are getting fast, fair
executions.  The last thing you need as a distraction is a constant hassle with
your broker. Try Interactive Brokers
for stocks and Global Futures Exchange
for futures.


4. Have a plan. Research day trading strategies and find
out which style suits you the best.  Do you understand opening reversals?
Momentum plays? Do you trade futures or stocks? Forex? Eminis?  Trading is a
wide-open field, and there are about as many styles as there are people on this


5. Back test your plan (quantify your results!).  You
discovered a new trading system last week that would have given you 80% returns!

automatically assume that every week will yield the same
results.  By back testing your system, you will learn the actual track record of
your trading

pattern, and this will give you an excellent place to gauge
your real money results.  Your system has had 15% yearly returns over the past 5
years, and this year you are down 5%!  Is your system flawed? Has the market
changed?  Are you even following the rules? Back testing gives you
something to compare your results with, and it also proves that what you’re
doing has a track record that has worked.


6. Money management.  Money management encompasses a wide
range of strategies, from diversifying your portfolio to trailing stops to

the risk/reward ratio for your trade.  It is one thing to
be able to read a chart and predict market moves, and it is quite another thing
to make money

consistently year after year.  Most successful professional
traders believe the money management is the most important factor in their
success.  Without proper money management, the outlier disastrous trade can wipe
out a market genius. 


7.  Confidence.  Work hard, then work harder.  Keep careful
records of everything that you are doing.  At the end of every week, study every
trade that you made.  Know what you did right and what you did wrong.  Build on
your successes, eliminate the mistakes that you keep repeating.  By doing this
you can build confidence in your trading abilities and your methods.  Gaining
confidence will help you follow through with your trading plan.