Here are 3 Day traders tips for beginners you must try before investing!
Trading can be a frustrating art.
Few, if any, ever earn enough to make it a full time job.
Which leads one to ponder the question…
Can I really be a successful trader?
And according to the efficient market hypothesis the answer isn’t motivating…
But lucky for you…
The efficient market hypothesis is blatantly untrue.
And if you don’t know what the efficient market hypothesis is don’t worry, let me explain.
The efficient market hypothesis is a theory that proclaims all share prices in the market currently reflect the correct, or efficient, price with all information and sentiment already baked into the price. OR in regular people speak; every share price in the market at this moment in time is accurately valued and if it were not, market participants would rapidly seize the opportunity to either buy or sell resulting in a sharp increase or decrease in the share price back to equilibrium.
Even that got a little wordy didn’t it?
Well, what it means, and I’ll try to get even more granular here, is that YOU (a day trader or any investor) cannot find deals in the market because all shares are selling at fair market value. Meaning, there ain’t no deals in the market so don’t even try buddy.
The efficient market hypothesis tells you the markets can’t be beat because everyone already has the same information.
But this is just blatantly false. Untrue. Inaccurate. Wrong. BS.
Because thousands of traders are capitalizing on the markets and making money every-single-day.
And they do so because they have an edge…which means they know something others do not.
Enter stage right: Mr. Paul Tudor Jones.
You may have heard of him. Mr. Jones is one of the most successful traders to grace the earth.
In the book Market Wizards, by Jack Schwager, he sits down with Mr. Schwager for an interview and talks about his career as a trader.
He also talks about 3 important principles that every trader should have on their radar.
Let’s get into it.
Day Trading for Beginners
But amid your bout of “trade-rage” i’d imagine you throw this rule right out the window along with your desk chair.
But Mr. Jones says it a bit more eloquently…
“Don’t avenge your loses”
If you’re a trader you understand when I say….you’re gonna have loses. It’s inevitable.
But the only way to mitigate your losses is by playing it cool. Almost every legendary trader has one thing in common….
They remain detached, unemotional and rarely make decisions spontaneously.
Don’t commit the trifecta of “fast-tracking-your-way-to-the-poorhouse.”
To be a little more specific…Mr. Jones means not trying to avenge losses by jumping right back in after a heavy loss. More often than not, the knee-jerk reaction to recover what you lost comes from a faulty place. It’s an emotional decision, not thought through with reason, and will only make you worse off than you were before.
But I understand how difficult this can be for new traders. The blood lust to recover what you’ve been robbed of can easily overpower any rational thought or logic.
Once you’re out…you’re out…
Each new trade is a fresh slate…
Don’t be fooled into charging back into a losing situation.
Which leads us to secret #2…