In trading, a lot of success is focusing on doing the right things and weeding out the wrong things. There are lots of successful stock traders having a great story of success. If you look more closure to their success in the stock market, you will notice something common in all successful traders. There are many successful stock trading habits you should learn. I will also tell you a few things that you should avoid in stock market trading.
In this article, we are going to tell you about some of the most successful habits as well as detrimental habits, that I’ve learned from successful day traders out there in the stock market.
The first thing I want you to do is to focus on the hot sector of the day. Now this always changes and evolves but if you’re focusing on the market, running your scan and reading the news, you’re gonna know what’s hot right now and there’s always something.
It’s one of the greatest things about the stock market is it never gets old, you’re never looking for an idea, you’re never looking for new information, there’s always something hot that’s moving multiple stocks. We love sympathy plays. It’s one of the best ways to trade in the short-term with day trading.
Look for that big mover that’s in the sector, then you can catch that big mover when it follows with the press release or the follow-up news. Dial-in on hot sectors.
The other thing I want you to do? The bad habit is, avoid last year’s hot sector or last quarter’s hot sector or three years ago hot sector. When there is something truly hot, you’ll know, you don’t have to be there first. Wait for it to be painfully obvious, that’s the best time to focus on the hot sector.
Next thing I see so many successful traders do is, focus on liquid stocks and vice versa, I see so many struggling, frustrated traders, they’re focused on illiquid stocks. Now, we talk about charts, charts, charts, so many of these have very good patterns, move, But if there’s no significant volume, which in our terms, that’s at least a million shares a day. At least one million shares a day, if it’s over a dollar.
If it’s less than a dollar, its gotta be higher. And ultimately, the higher the volume, the better. The stock market’s about supply and demand. The more demand means more volume. The more potential for a sustained move is driven by more buyers, which translates into volume.
The biggest thing I see successful traders doing is only trading liquid stocks. If you’re right or you’re wrong, you can get in and out easily, no matter your position size. If you’re trading some puny, illiquid stock, even with a good chat, if it’s trading 100,000 shares or 10,000 shares a day, even with a small position, you can’t get out without creating slippage. You’re basically trading against yourself.
Do that, avoid anything with less than a million shares traded and that will get you out of mediocre, or keep you out of mediocre setups, I should say.
Third thing is that I see successful traders doing, versus unsuccessful, is pay yourself first, okay? You’re in this game to pay for a vacation, to pay down debt, to maybe just save your money. But the biggest thing is to think about trading as a skilled trade, as an electrician, like a plumber, like a surgeon, like a builder. All of these guys and gals, that are in these skilled trades, they’re gonna practice their skill, then they’re gonna pay themselves first, they’re gonna save money or accomplish whatever their other goal is.
What I see so many unsuccessful traders do, they have a few wins and they just trade bigger and they don’t take that money out, so now they’re going from 100 share positions to 1000 share positions, they haven’t matured as a trader, they’ve upped their size, they’ve upped their size before they proved they can be consistent.
And when that one trade comes against them, it blows up months or even years of what you’ve worked so hard for. Something I talk about with trading, short-term trading is, treat this as a side hustle, something that can supplement your income.
I mean, if you did something, a side project whether it was a building or a piece of art. If you sold those projects, the first thing you would do is take that money and reinvest it in something or pay down debt.
In trading, I see the opposite, especially among unsuccessful traders. They just use it to up their size, they get greedy, they make a few hundred, they wanna make a few thousand and it almost always ends up worse.
Let me know in the comments, I’d like to know, what’s your methodology? I’m not saying one is right or one is wrong, but do you pay yourself, or do you just leave that money in your account and up your risk? I would hope you’re banking those profits to accomplish your goals with trading.
Also Read: How To Earn Money In Share Market Daily