Profitable Day Trading

Today I am going to talk about 2 traders who have same amount to trade and have same trading system. But end of the month when we look at their net balance you find one of them loosing 40%(let us call him Looser) and the other gaining 30% (Let us call
him Winner). Let us analyze why they lost/ gained.

Looser always looks for perfect trading system and he keeps upgrading or changing his trading system and blames the system for his losses. He belives toomuch on his trading system and hardly uses stoplosses. On the other hand our Winner have a average trading system which he uses to full affect and makes small profits every day. He accepts the mistakes committed during the trading day and tries to rectify them in next trading day. For him every loosing trade is one of the series of trades he is going to do over the longer term.

Looser happily sleeps till market opens and makes the trade decisions around the market opening time and quickly changes his
plans by looking at the screen every second. He increases his trading amount after every loss making trade to cover the loss quickly. He will be greedy with the price dancing around in front of his eyes during the day. Screen gets the grip of him.
Our winner wakes up little bit early and before his trading day starts he prepares the plan and visualizes the scenarios for each trade and writes it down. He strictly sticks to the plan and puts proper stoplosses and trades with little % of trading capital. No matter what happends to his trade he sticks to his plan and enters and exits trade as planned. Winner's strategy has limited risk as he is not investing much on day trading so he will not loose much. Whereas our Looser is a big gambler who might win huge chunk on his winning day but might get out of the market forever on a big loosing trade.

Winner never looks for the absolute amount he made rather looks for the number of points he won. Whereas our Looser will always think in terms of absolute amount he make, in the process he will never take smaller profits even when he know his trade is not going to give big amount. He will never look at risk reward ratio. Winner always evaluate the risk involved in and enters the trade only when risk reward ratio is favourable to him.

Looser always trades for his ego and attaches lot of emotional value to his trades. He would never want to be a looser. He gets irritable with markets and blames the market makers,blames the life ,blames the time (mera time nahi chal raha hai)etc. These are real signals of Looser. His ego gets hurt with each loosing trade and he puts more trades in order to cover up his losses and gets into the emotional spiral and damages his account.
On the other side our Winner is emotionally detached with the losses and profits he makes in the course of the day. He sticks to
2 to 3 trades a day no matter what his trades does he might loose some and gain some but for his they are all same(series of trades in the bigger horizon). He will not look at the screen every second, he will trade first few hours of market opening and last half hour, where momentum will be there for day trader. Remaining time he spends for his personal work and family. After all we all trade for making money which will give good life. We should not trade at the expense of life.

Problem with our Looser is that he always uses the weaker words like Loss(for money lost in trades) etc... Wherewas our Winner terms the loosing trade as EXPENSE and winning trade as INCOME. He feels like a real professional who is doing business in stock market. It helps him in keeping his composure during loosing trades.

End of it whatever we do in stock market is for making Profits. If we want to play there are lot of other games available to us to play at lesses price. We should never think like a Looser and should stick to the disciplined approach followed by the Winner. It is more important especially when you are a day trader where every minute screen oscillates and gives you a different direction. Keeping your kool and sticking to the day's trading plan which was prepared before will give you the winning trade on some day. Always look at the big horizon and don't bother about the individual trades. They are part of series of trades you made and you are going to make during that big horizon. Ultimately total amount you make on that bigger horizon makes all the difference. So don't worry about loosing trades and have a happy day trading.