The Mind of a Successful Day Trader

Successful day traders are unique people; a rare breed — the sort of people who can dive head-first into one of the most stressful types of work on the planet and emerge triumphant with consistent profits.

Succeeding as a day trader takes a lot, but the most important tool that any day trader has is between his or her ears. A quick-thinking mind and the ability to use it carefully even in fast-paced,high-pressure situations is what separates the successful day trader from everyone else. Let’s take a journey into the mind of a successful day trader and see what we find.

Calm, cool, collected

If there’s one thing that defines day trading, it’s stress. Day traders aren’t like passive investors. They need to constantly be on their toes. Experienced day traders know better than to walk away from their computer while they have an open position because things can change incredibly quickly when dealing with volatile parts of the market.

All of this stress can lead to bad decision making. Experts agree that stress often leads to bad decisions, which will come as no surprise to anyone who frantically tries to complete a last-minute project. That’s really bad news for day traders, because stress is everywhere in day trading.

The minds of the best day traders can keep their cool when things go off the rails. You can cultivate your own calm with therapy or meditation. You will also be better off having something else that’s always on any day trader’s mind: strategy.

Strategies and rules

Great day traders can think fast, but don’t just rely on their wits alone when making the split-second decisions. On the contrary, to do so would be a big mistake. Investors who rely on gut feelings and hunches are likely to lose big.

That’s why successful day traders fill their minds with strategies and techniques. Day traders know their toolkit and their options: trends and momentum, charts and calculations, stock options vs RSU. Successful day traders have tons of information at their disposal, and shape their decisions around a unified and consistent strategy.

In fact, the best day traders often have hard-and-fast rules for trading that keep them from having to make judgment calls in the moment. With an almost algorithmic mindset, these day traders can rest easy knowing that their decisions won’t be derailed by stress and confusion.

Less to worry about

How can the best day traders be so zen? Aren’t they constantly on the verge of losing everything?

No, and you shouldn’t be either. Smart day traders can think clearly in part because they’ve used their heads and have set up a safe, intelligent day trading scheme. They have robust emergency funds to help them get through lean times on the market, and are smart enough to not us hard-earned retirement savings in their accounts. They have lots of capital for day trading, but didn’t have to draw money out of other important places to get it.

When successful traders profit from day trading, they take some of their earnings and save for retirement. If necessary, they replenish their emergency funds, too. When they aren’t as lucky and lose money, they draw steadily and carefully from this stockpile and trade carefully on conservative, proven strategies.

The best day traders know that they’re dealing with a dangerous market, and they set stop/loss orders and limit their risk in every way that they can. They’re not averse to risk, but they’re not throwing darts at a stock chart or gambling their children’s college funds. To be a successful day trader, you need to use your head and manage your risk. With the right setup and the right mindset, you just might make big money.