If an investor asks a trader what the most important element of their trade plan is, they will often hear a long explanation of indicator setups and entry signals. If you ask this question to a successful professional, you will be surprised to see that there is more to trading than indicators and signals. More importantly, a reputable trader will always have an exit strategy when profits or losses are involved.
If a person looks at their trading plan and it says nothing about an exit strategy, they should revise their plan immediately. Here are some things to steer clear of when day trading.
This error is closely related to the above problem. Most modern chart and trading programs offer hundreds of technical indicators. In trading magazines and Internet forums, new “infallible” indicators are constantly being discussed.
And this is the problem of many beginners: If an indicator does not bring the desired result, the guilt is pushed to the “wrong” indicator and the next one is tried. In a historical review, everything is always great when every trading instrument proceeds as expected. Unfortunately, some indicators do not work as well as the trader may have thought.
Indicators should be focused upon but not relied on
An indicator is a different representation of information already included in the trader’s planning chart, mainly dealing with price and volume. It does not add new information and should not be understood as a crystal ball for safe prognosis. Many beginners over-estimate the predictive power of the indicators and focus too much on this area.
Focus on the essentials. Lots of indicators that generate dozens of entry signals will not bring you success. Make sure you understand exactly what indicators are and what they say. Investors should know and accept the limitations of these tools.
Be realistic: With 1000 dollars in a trading account, people cannot earn enough to living comfortably. Often the profits of a day, which have performed well, are calculated for the whole year. People who think they can make a 3-5% profit every day are dreaming. Also calculate with loss phases, which every trader has.
For day trading with US equities, the required minimum is currently $ 25,000, even this is still too little to live on in the long run. Find out more about Rockwell Trading on Facebook here.