Top 7 Reasons Most Day Traders Fail
By Christopher M. Knight
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- Failure to follow your gut instinct, instead of listening to others who are giving you their advice which might be right for them, but not right for you.
- Failure to realize that this is a "capital appreciation" game ONLY. There is no other purpose, beyond growing your capital.
- Failure to be smart when the market gets stupid. This means that you keep your cool, your emotions in check, and keep this game in perspective. Failure to get out when you should also can ruin your profits in the blink of an eye. "When" you should get out is up to you.
- Failure to double down when a stock you hold goes lower, but you believe or have a feeling of certainty it will recover. Doubling down means buying more when a stock goes lower, so that you can make more when it returns to the original level you may have bought it at.
- Failure to pay attention to the message boards, believing they are all nonsense. Bzzzt, try again. Like all things, take the best stuff and forget the rest. The web based message boards are a great place to gauge the emotion of the market for a particular stock.
- Failure to follow a system, making decisions on random changes and failure to execute trades when your system is telling you to preserve capital by cutting a loss short.
- Failure to take this game very seriously. This is a business or can be. That includes doing your research, studying, stalking wealth by becoming the best expert you can be.
Disclaimer: This is not investment advice, I am not a broker, this information comes with no guarantees or warrants, and you should do your own due diligence before making any investment. Consult a professional for advice before day trading. Day trading is risky and you could lose all of your investment. Past results are not indicative or guarantee of future performance. This information is purely for educational and entertainment purposes.
FYI: (For the many who asked me what a "Day Trader")
Definition of a "Day-Trader" vs. a normal stock "Trader" is: Day Trader is a person who buys and sells a stock in the same day, instead of buying a stock, holding it, and then selling it sometime in the future, usually in months or years. Day Traders are not evil people out to ruin the market, but rather are folks who leverage the internet and information age to make and/or lose a lot of money in a short period of time.
Article Submitted On: April 22, 1999