Day Trading Mistakes That You Might Want to Avoid

You might be making a step ahead and two steps backward. Because mastering the art of day trading can be an uphill task, and there’s a huge learning curve to cover. Any legit achievement comes with hard work and discipline, and so is day trading. And making mistakes is part of the process. 

But you can avoid some costly mistakes we have highlighted in this article:

  • Chasing Trends

Avoid the urge to wait for confirmation that you are right before entering a position. This delay might cost you planned entry points. If these points are correct, you may end up buying a stock at a higher price if there’s an anticipation for an increasing trend. 

Again, an expected downward trend might force you to sell your stocks way lower than what you anticipated. And if you continue chasing after trends, you may miss your preferred entry prices. This will cost your initial entry and exit points.

  • Using Unproven Tools

Do your research and check reviews of trading aides that are working. With, you get potent indicators that will help you take charge of your trade. However, you will need to upgrade to the advanced version for more pro tips that you won’t get with the standard version.

But this should come once you have learned the inside wires because the tool will not do all the work for you. Also, be sure to check the reviews of the tool you are settling for. 

  • Failure to Plan

Before the market opens, spend 1 hour or two planning for the day’s trading. You will plan and calculate your potential losses, your entry and exit points. Most pro traders put in 90% of the efforts to plan and 10% to execute.

Plus, research thoroughly to come up with a personalized trading plan. Update it regularly as you gain more experience with live trading. Because using other people’s plans may not work in your context. 

Again, your entire investment can go down the drain if you want quick money. Planning is part of the work that goes into reducing your chances of losing. 

Ensure you follow your plan because following it is as important as coming up with one.

If you don’t adhere to your plan, you can easily make the next trading mistake – overtrading.

  • Overtrading

Most new traders focus on trading their profits and PnL instead of trading their plans. The allure of quick profits might tempt you to buy lots of stocks that are moving up. This will be a recipe for your doom.

Serious traders will take calculated moves by following their trading plan. In a day, they will trade a stock or two. 

And again, if you have less than $25000 in your account, you are limited to 5 trades within five days. This rule sounds limiting but helps you hone your accuracy.

Overtrading can lead to emotional trading, which in turn leads to revenge trading. Avoid greed and emotional trade by:

  • Following your stop-loss
  • Taking a break from your trading computer
  • Shutting down entirely till you sober up

The market will be there even tomorrow. Most emotional trading will cause more losses and frustrations.

  • Live Trading Before Practising 

Before you can trade live, do paper-trading for a month or so. This will enable you to learn all the mechanics, broker interface, and technicalities. You will also learn how to plan and have the screen time you need for precision. Plus, you will learn how different stocks react to various news.

So do paper trading as if it were live trading. 

Imagine selling your entire position when you mean to scale out—or being unable to change your long order to a short. You can avoid such pitfalls by trying to simulate the live scenario in every way possible. For instance, if planning to fund your live account with $1000, then paper trade with $1000.  

These kinds of experiences take time to learn. But if you have the time, you are set to make it big in day trading.

  • Scaling Up Your Size Too Fast

Temporal success can delude you to double your size. Avoid this temptation and test every strategy first till you are sure it’s working. Aim at scaling up gradually to avoid losing the gains you had previously accumulated.

Losing your gains over a short period can be psychologically torturous. So take your time to bond with a strategy that’s performing well. Because such a strategy, if well mastered, can make you money for life.

Day trading is rewarding only if you put in the work needed for research and implementing the tips you learn daily.