Psychological tips and tricks

Some psychological tips and tricks that help you get going.

11.1 Take your time and invest time

Becoming a successful day trader that makes consistent profits takes time. Be patient and you will be rewarded. Many traders are trying to find shortcuts (events) because they don’t want to invest much time in becoming a day trader. But it’s inevitable. You simply can’t skip the part of putting time in the things you need to learn about day trading. The only outcome is that you will fail like 95% of all day traders do.

Investing time is much easier for someone who lives alone and can plan their schedule on their own. But what if you have a family with multiple kids and work forty hours a week? It can become quite difficult to find all the spare time that is needed to learn everything about day trading. That might mean you have to make sacrifices. For example, not going out on the weekend but spending these hours learning more about day trading. Or you need to skip all those evenings you watch TV and start watching youtube videos about trading.

Most people have no interest at staring at charts or numbers all day. In fact, probably 99% hate it. Day trading is a job. If you are good at it you only have to “work” a few hours a day. But before you get to this point, you have to spend many, many hours looking at charts, calculating position sizes, how much leverage you need to use, finding out how various indicators work, spend many days backtesting and forward testing and much more. Basically meaning you have to really commit to it. If you don’t you might as well stop right now.

11.2. Don’t compare yourself with others

It’s very easy to compare yourself with others. But at the same time it’s completely useless. Because you have no idea how much time and effort other people have spent to get where they are.

If you go to the gym and see a very muscular guy, you already know that person spent many, many years of dedicated weight lifting and following strict diets. And although there are many that use anabolic products to speed up their progress, that does not mean they can sit back and lift some weights occasionally. Very muscular people are very dedicated following a certain set of rules. Like training x amounts per week, eating x amounts of food x and are not using alcohol or other foods that are considered bad. If you think about it this way, literally everybody can become muscular if they really wanted to. Becoming muscular (or losing weight) has nothing to do with your genes. It is simply following a specific set of lifestyle rules on a very consistent basis.

Trading is no different. It requires you to follow a specific set of rules. These rules must be used every single time. Comparing yourself to other traders is the same as comparing yourself with the most muscular guys in the gym while you've never worked out before. Take your time and you'll eventually get there.

11.3. Stop jumping from strategy to strategy

It’s very easy to get lost. There are countless trading strategies out there. Many traders are trying to find the “holy grail” strategy. The one that makes consistent profits without spending too much time on the charts. The problem is that the holy grail strategy does not exist. Many traders start using a strategy but then suddenly they get in a losing streak. They think the strategy does not work and start looking for other strategies. As mentioned in this guide, the more trades you make, the higher the chance of a losing streak. The chance of losing 5 trades in a row is actually almost 100% when you trade 200 times or more.

Stick to a strategy for at least a few months if you did your backtesting the right way. Don’t fool yourself when you get in a losing streak. You have the data, you did the numbers. The strategy works. But that does not mean strategies work forever. Sometimes you need to change strategy. You need data to back it up. If you are in a losing streak you should check if you followed all your trading rules. It’s hard to stick with your rules if you are in a losing streak but it’s key to success.

11.4. Stop thinking about money

Stop focussing on how much money you are winning or losing. Start focussing on your strategy. Winning or losing money is not important. Because if you did proper backtesting you already have the data you need. Focus on finetuning your trading rules. It does not matter if you lose money. You will eventually. Chances are you'll encounter many losing streaks. If you apply personal money management the correct way as discussed in my investing guide, you never have to worry about losing money.

Losing money is a big part of day trading. You will probably lose way more trades than you'll win. But thats ok because the risk reward ratio determines if you make profits, not how much wins or losses. If you chase money you'll never catch it. If you focus on the data and implementing the strategy the correct way money will eventually follow.

11.4 Emotions, emotions, emotions

We are humans. We have emotions and they will be there whatever you do. Most of the time we get stuck in emotions and let them rule the situation. It’s impossible to completely shut them down. That’s why it’s important to always stick to your tested trading rules regardless of what emotions are telling you. You have the data, you have backtested your strategy, it works. As mentioned before, losing streaks are real. They will happen to you eventually. It does not matter. You can’t avoid risks, you need to manage them.

And to end with a cliche, never use money you can't afford to lose or need in the near future. Never try to win back lost trades. Emotions will take over creating even more problems.

Good luck in your day trading journey!