DAY TRADING: EXPECTATIONS VS. REALITY
Day trading refers to buying securities and stocks when they are lowly priced to resell to make a profit within the same day. Therefore, it implies that by the end of each trading day, the Trader has already concluded on all their trades and can assess whether they made a profit or a loss. Day trading is a short-term trading strategy.
EXPECTATIONS OF NEW DAY TRADERS
One of the most disastrous setbacks to day trading is setting unrealistically high expectations. It is a frequent phenomenon with newbie day traders. When you first start as a newbie, you tend to erroneously think that you can make your first million in a week or a few months. You have better chances playing the lottery or selling your two kidneys and a liver.
Snake oil salesmen and people who call themselves "Miracle traders" are con artists. If you have promised that you will get a 100% return in your first year of trading, then that poor soul fed you with lies. Lead Trader Tim Bohen says some newbies feel they can turn to $500 to 1 million dollars.
WOthers hold a particular position for an unrealistic amount of time and blow up their accounts and then turn around to say trading doesn't work and is some scam simply because they didn't initially manage their expectations.
THE ACTUAL REALITY
Remember, many traders lose out at some point when they are just beginning to get their skin in the game; pundits estimate the percentage to be 90%+. Whether accurate or just estimates, it is important to have the back of your mind that losing is part of the game lest you might become another statistic.
The probability of hitting a home run with your first attempt to execute a particular trade strategy with insufficient knowledge and experience about day trading ranges from very slim to zero. Even experienced traders still incur losses which are estimated at 35%.
One of the most efficient ways to manage your expectations is to understand that you should frequently alter your view of the market depending on the market's price action and signals. This will help you go in the right direction of a successful day trader.
Once you fully understand that you have zero control over the stock market, you can manage your expectations better. Rational decisions will affect many of your trading strategies and become less risky. More wins than losses are recorded with rational decisions. It is not to say the losses are eliminated. Rational decision making minimizes the risks involved in day trading.
There are countless stories about the juicy wins and mouth-dropping successes of other experienced traders but fewer stories about their errors and the lessons they learned from them.
The painful side of their trading journey is not shared with as much enthusiasm as their wins. When all the necessary knowledge has been gathered of experiences coupled with losses, you will come to realize that as a trader, you will get more valuable lessons from your errors than you will ever get from all the times you've won.
Don’t fear losing as it is an unavoidable part of the game. Learning to control your losses by sticking to your plans and using stop losses is a worthy route to take. All losses will not occur because you did something wrong. The market is always irrational. You cannot control it.