EP 119: Six Things I Learned From Day Trading

...with the stock market all over again. 

I always thought I loved investing and the market. I love researching the stocks, watching the market, and seeing my money make money. 

Lately the market has taken me back to my first love: day trading. 

When I first started trading, I didn't have a lot of money. I was trying to flip my account quickly.  

Having that experience helped me make decisions quickly because I had to act fast. 

I want to share six principles I learned from day trading to help you make those quick decisions and hopefully become profitable. 

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Whenever I enter a new trade, whether short or long term, I like to assume it's not going to be a good turn out. 

I tell myself I won't be getting it at the best price or time. This keeps me humble so I don't get too excited about the trade in case it doesn't work. 

I like to err on the side of caution and buy a smaller amount, like 10-25 contracts. This way I can get off the sidelines and into the game. 

If I'm wrong, I can pull back and only risk a small amount. If I'm not wrong, I can now go in and add more to a winning position.

The most important thing to remember is to be kind to yourself if you're wrong. We all make the wrong decision from time to time. 

If I'm in a trade and its going down, and keeps going down... I can't beat myself up about it.

The thing I love about day trading is that is allows me to switch my strategy and play to the winning side. 

I don't have to wait six months to see the stock going down. Within minutes, I can pull back, switch my strategy and move on. 

This helps breaks the emotional chain and keeps you focused on making the right decisions. 

If we are playing something bearish and think the stock is going to fall, so we have some put options... if it's creeping higher and higher, pull back. 

Break the chain of hoping the stock is going to fall. 

We thought things we going to go differently especially with the Fed rates increase. Who am I to argue with the market? 

Stocks are moving up, market is going up... let's go bullish, even for the day. Many times I've started my day with put options only to turn around and grab some call options before the day was over. 

If the market isn't going down, it's going up and let's profit off that. 

This is not only a principle for day trading, but for regular trading as well. 

You may not need to make a decision that day, but being ahead of the game helps you prevent the bleed long term.

I know these three things before I even place the trade:
-Exactly where I am going to exit to take the smallest loss possible
-What option I can sell to turn my trade into a spread to minimize risk
-If the stock goes down, I have a call option on standby (or the opposite)

When it's time to make a decision, you are focused on so many things. Deciding what to do before the trade is made can help you make your decisions quickly. 

This is the difference between losing money and breaking even.

I don't need to be right or have my ego fed.

We don't have to be right - there are plenty of times I made a trade and I was wrong. 

In the market, it's about being humble and not about being wrong. It's about being rich and making money. if you made the wrong decision, pull back, and reverse it. 

I don't have enough money to control the market, I just have to move the way the market is moving. 

We don't have to be right, we are here to make money. 

Day trading is the ultimate player. 

We aren't trying to get locked down to one stock, direction, or strategy.

If something is going the way you don't like, get out of it. Switch up your strategies to make the most of how the market is going. 

There has been so much volatility lately, so I've been taking it day by day, week by week. We don't want to be tied down right now.

What principle do you relate with the most? 

Learn more about the market and tell us about it here, at Power Trades University and bring back the spark in your trading life.