3 Lessons From The Humble Trader On YouTube To Become A Successful Day Trader

1. Prepare for the worst and hope for the best

In an industry dominated by middle-aged men — according to Zippia, 90 percent of day traders are men, and their average age is 43 — Huang stands out. But she worked hard to make a name for herself.

If she learned one lesson from her nearly ten years of experience, she would encourage new traders to be financially stable forward They start trading.

Even if you have enough money, she cautions against putting all your savings into your investment account. Make sure you have an adequate emergency fund just in case.

Be sure to manage your expectations. While Glassdoor says the average salary for a day trader in the U.S. is $107,800 (broken down into a base salary of $78,109 and additional commissions of $29,691), earning this income involves a lot of sweat equity.

“I would say 90% [who] The ones who fail are usually the ones who don’t make it through the first year,” Huang said. “Indeed, only 10% of traders are profitable,” Huang said. “And I would say only about 3% actually make money.” Big money…but I would say most people…have wrong expectations. “

The next thing you need is a plan. Typically, successful day traders start their work day by developing a strategy and then execute the plan for the day, but the overall plan should always remain the same. It should include:

  • Your Trading Motivation
  • how much time can you put in
  • your goal
  • Available funds
  • Your entry and exit levels (when do you buy stocks and when do you sell?)
  • your risk management rules
  • how you will keep records

importance of research

Research is an important aspect of day trading.

Traders typically spend a few hours a day checking the news before the market opens, assessing trends that may affect the market and reading about specific companies that pique their interest. Then, when the market opens, they just have to follow the plan they made.

In the spring of 2022, Bloomberg noted that amateur day traders — moms and pop investors — who flocked to the industry in the first year of the pandemic — lost more than $1 billion during the bull market.

Bloomberg attributes much of these losses to transaction costs, outsized bid-ask spreads — the difference between what buyers are willing to spend and what sellers are willing to sell — and flippant buying, considered obvious newbies. mistake.

This will only make people aware of the importance of a well thought out risk management strategy and well-tuned plan.

2. Be prepared to learn the hard way

Your trading plan should remain the same every day – whether you plan to trade $5 or $5,000.

But while you’re still figuring things out, you should plan to test the program with less money until you get a feel for it. Once you have success with smaller amounts, you can gradually increase if you wish.

“Even if you have $20,000, don’t trade with $20,000. If you only have $3,000, risk $10 to $20 to learn,” Huang said.

She calls it “paying market tuition.” Think of it like the money you pay to get into a post-secondary institution in order to get a degree.

When you’re just starting out, you’re going to face losses, Huang said. But as long as you apply these lessons to your trading plan for future trades, you will improve.

As for your time, you can spend as little or as much time on transactions as you want. Many amateur traders concentrate their trades during “business hours” between 9:30am to 10:30am EST and 3:00pm to 4:00pm EST.

But as with any practice or career, the more time you put into your studies, the better you’ll get.

However, keep in mind that if you day trade, you will never have a real “rest” time. You may ask your broker to take care of your portfolio for a few days and watch your stop-loss orders – orders traders use to limit losses or lock in profits – but if you choose trading as a career, be aware that it will need to be quite ongoing s concern.

3. Never take it too seriously

As a day trader, it takes a certain personality to thrive. Are you level-headed when you’re stressed? Are you able to control your fear and greed to make rational trading decisions? Do you have a regular routine? Can you stick to your training plan?

Consistency is critical.

As Huang points out, the market is different every day, so “the way we study stocks, the time [we] Wake up, when we use computers every day, it’s…the same, it’s set in stone…you hope the only variable is what the market gives you. “

If a stock has an unexpected rally or sell-off and you either miss out on profits or get stung by losses, try not to take it personally. There are many factors that affect the market movement, and as Huang puts it, “the market doesn’t care … the market only cares about taking your money.”

Record your day, revise your trading plan if necessary, brush it off and move on.

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