4 Things I Wish I Knew When I Started Day Trading
I’ve been trading for six years now, and I feel like I’ve aged 20 years. I've made all the mistakes in the book. Here are the 4 things I wish I knew when I first started day trading.
There's a huge learning curve involved in day trading. No, it's not as simple as getting up 10 minutes before the market opens, and start banking Lamborghini’s within 2 weeks. But believe it or not, when I first started… that's exactly what I had in mind.
I thought I knew it all, buy low, sell high. How hard can this day trading thing be? Well long behold I blew up a couple of accounts by following chat room alerts, buying high of the day breakouts on low float penny stocks, adding to a loser, etc.
That was the biggest mistake. And that could have saved myself from blowing up.
All jokes aside, after six years of trading… I've definitely learned a lot about myself but in trading, the more you learn, the more you realize you don’t know. Here are the top 4 things I wish I knew when I first started day trading.
1. There is no secret trading strategy
The first and most important one is… there is no “secret” trading strategy. I wish I realized that sooner. I spent months when I first started jumping from one chat room to the other, one DVD to the next, and one course after the other, just looking for the secret that's missing. The one thing that will allow me to start banking right away.
In fact, the “secret” to day trading - that doesn't exist. I'm just gonna drop that right now. I'm sorry if that just shattered your dream or your hope of finally finding the buy button for my non-existing Lamborghini DVD.
There’s no secret indicator that will automatically top tick and bottom tick for you, and there's no secret set up or strategy that will guarantee you a 100% success rate all the time.
Everyone’s trading set up and strategy is going to be different. A trader can hand you his setups from steps A to Z on how to buy or short a setup that he is extremely good at. Let’s say that strategy gives him 80% success rate. You take that and try to copy it and sadly it’s not going to do the same for you.
At the end of the day, we are different traders. You might be more patient than I am and a great trend trader, but at the same time, you may not be able to analyze headlines and react to the volatility and price action as fast as I do.
That's why there is no one “secret” setup or strategy that will provide 100% win rate for everyone. That's not what's missing in your trading. What's missing is your own personal experience and screen time, and whether you are putting in the work to actually learn and perfect your set ups.
It's up for every single trader to constantly learn, and yes put in the work to make any set up or strategies their own.
I know the truth isn’t pretty. But hey, it's better to have someone like me, a Canadian, break it to you. Sorry to shatter your Lamborghini dreams. But you’ll be ok. You can rent one for $4k a day.
2. Make your own trading plans and do not follow others.
Now that we got the hard truth out. The second thing I wish I knew when I first started: Make your own trading plans and do not follow others.
When I first started, I was a follower, aka a sheep. And guess what, sheep get slaughtered. Whether a stock should be a buy or sell, that decision should never be made because you see other people doing so. The same thing goes for following chat room alerts or signals. Do you even know why the stock is running in the first place? Do you know their float number and do you know if they have any dilution?
It's fine to read and observe what others are doing for ideas that can potentially lead to your own set ups, but don't be a follower.
And that's why if you may have noticed, I never do any of these, “5 stocks to buy right now” videos. Nothing wrong if someone else makes those videos, and I understand why people like watching them.
The reason I don't do those videos and in my own Discord chat I never give alerts, is because I truly think that in order to be profitable day trading, you need to be thinking for yourself.
It's ok to read ideas and see what other traders have to say. I get tons of ideas from other traders I trade with on a daily basis, and I provide tons of trade ideas of charts that look like they are going to breakout, or due for a pull back after parabolic.
But it's up to you to take those ideas, and filter them out and see if there is indeed a set up for you to go long or short. That’s called finding a stock idea, but creating your own plan based on the idea.
If you find trading stocks to be difficult or a scam, then I mean, why would you click on a video that says day trading on it and waste your own time… My point is, the videos and set ups I share are meant to be ideas for you to perhaps try out and implement, but they’re not the holy grail of day trading. Like we talked about earlier, there is no one single strategy that will fit everyone.
3. Focus on reading the chart first before anything else
The third thing I wish I knew when I first started day trading is to focus on reading the chart first before anything else. Reading stock charts and candlestick price action is perhaps the most important key factor to understand in day trading.
I know there is a huge learning curve involved with day trading. When I first started I was so overwhelmed. I believe the most important thing to focus on first and foremost is chart reading. Daily chart and intraday. Without knowing what a bullish or bearish chart looks like… nothing else like news alerts and reading l2 will help you ever.
Understanding what the sentiment is like for the stock almost always starts from the daily chart. If the daily chart looks sluggish and all the spikes look like they failed miserably like my math exam, then perhaps there would not be a good breakout long during the intraday chart.
It's only after learning to read the charts and the price action, that you can determine possible buy entries and profit taking targets.
If you are investing long term, maybe you can just throw some dough in a stock and never look at it again till 5-10 years later. But if you want to day trade and swing trade, chart reading skills are the first thing to learn.
4. Give yourself more time and patience to learn
The fourth thing I wish I knew when I started six years ago is that I gave myself more time and patience to learn. I wish i understood that… hey there’s no rush here. Learning to trade will take months and years.
I think a lot of new traders are joining the market right now because of the pandemic. People are working from home and in front of their computer, but 90% of all new traders starting to trade treat this like a hobby or just gambling.
While I didn’t think that was what I was doing intentionally, looking back, I definitely treated trading like a hobby too when I first started. I paper traded for about two weeks only. I thought I knew it all and was ready to make Lamborghini money. It's simple right? Get some alerts, buy low, sell high.
People like humbled traders are just being a downer, they say trading is hard and will take years, nah I’m smart, I have straight A’s in high school. I'm gonna start banking 5G’s a day within a month.
This is a perfect example of the Dunning-Kruger effect. It’s a cognitive bias where people who are incompetent in certain areas believe they are smarter and more capable than they really are.
It’s the same in trading, brand new traders entering the markets, myself included, often wrongly overestimate their knowledge and skills in trading, because they simply don't have enough experience in the market to see all the inefficiency and volatility. Basically, new traders simply don't know what they don't know.
And now even after 6 years trading, even though I do know what I'm good at in trading, I'm still learning every single day. The market is ever changing. The more time you spend learning, the more you realize you don’t know .
So if you’re relatively new to trading, give yourself and your own trading account time. There is no rush. If you think about it, we go to college for years just to get a degree and finally start working and making money.
So what makes you think a new trader brand new to the market can start banking without putting in months or years of hard work and education first? The more eager you are to start banking right away, the faster you’ll be likely to lose. And if you’re in a rush to make money, then you have better chances just buying the lottery ticket.
I'm going to sound like a broken record by now. Trading is not easy, but it could be learned slowly if you put in the time and work. These are just some things I wish I had ingrained in my own trading behavior when I first started.
Stop looking for “secret strategies” they don't exist, it's up for you to adapt and make a strategy fit your own style and temperament. Stop following others to buy and sell. It's fine to listen to ideas, but always form your own trading plan before buying a stock. Focus on reading charts and most importantly, give yourself the time, and patience you need in order to observe and learn from screen time.
Hopefully some of these tips help you out, especially if you are just starting out in trading. I wish I didn't buy into the get rich quick scheme. I'm not talking about any specific person or service here, I'm just speaking out to the universe and hoping the Lamborghini god will answer my prayers.
