Start your Day Trading with a solid plan
Day trading is exhilarating. No argument about that. There is nothing to compare to the thrill of a successful trade. Even making the right decision to sell a losing position is satisfying. Day trading is for adrenaline junkies. However, before you jump into day trading, your business decisions will benefit from spending time creating a trading plan.
Whether you work on your own or with partners, you have to develop a plan, a code, by which to run your trading business. It’s valid for part-time traders as it is for full-time online stock investors. Here are some questions to answer to help you create your online trading business plan. It’s boring, but you’ll never regret spending the time developing this plan. This is the first in a series of articles about creating a stock trading plan for your own day trading business.
Why Am I Online Stock Trading?
This question may have obvious answers. That’s ok. Put them down on paper. Should you find that the reasons you became an online investor, or more specifically, a day trader, have drifted away from the original ones, then it’s time to re-evaluate your actions or original decision.
I have multiple reasons.
I don’t want to trust others with my financial future.
I like that I can execute trades from my home office, my car or even in the middle of a skiing trip. I’m not tied to a location to earn my income.
I enjoyed reading this study on the rationale of day traders, I also found this article on day trading hilarious!
Yes, I love the thrill of day trading. Make sure you check out the Margin Rules.
What Distractions Do You Need to Remove to Be Successful In Online Trading?
This covers a lot of territories. There may be family situations that can cause you to lose focus or become distracted. What do you need to do to remove these distractions? Or perhaps the answer is to adjust your trading behavior.
For example, I have to pick up the kids every Tuesday and Thursday after school and take them to their afternoon activity. In the summer this is swimming and soccer. During the rest of the year, it involves dance classes, gymnastics, and kickboxing. School ends a 3:30 and that’s when I need to pick them up. That time frame kind of puts a kink in my trades a the close of the trading day. I choose to continue with my commitment to shuttle the kids around and use my online trading program to setup triggers on my positions. My trading program does the job when I can’t be there. This isn’t that big of a deal because I rely on trading programs to execute a lot of my trades. So here is another example.
I moved my home office out of the basement into a separate room in the house. We have a spare bedroom and I stopped trying to use the basement as my trading office. I was constantly interrupted by kids, pets, and other distractions. Once I moved into an area where I could close the door, these distractions went away. As my trading matures (as well as my bank account) I will probably move completely out of the house into a dedicated office space.
Do these look like your reasons? Go ahead and use them for your stock trading plan.