Want to Trade? Have a Plan


Day traders who have a successful career trading the stock markets may trade in a variety of stocks, perhaps in international markets, and in a number of styles. They may have a trading style of a swing trader, or a market maker, or perhaps a position trader. But even with all these differences, it is possible to pinpoint one thing that all successful day traders have in common: they all started with a trading plan.

Making a living by trading is a job of work, and like any other career requires continual learning and adaptation to altering market conditions and trading methods. There are four elements of any trading plan that a beginning trader needs to consider.

Office Space

A trader’s office should be dedicated to the task, and set up for the individual’s needs. The desk should be functional, and color schemes conducive to the trader’s psyche. This is the place where the dedicated day trader will spend most of his time, and it’s not uncommon to find items that serve to create a relaxing atmosphere. Many traders will have stress balls on their desk, but others have their favorite photographs or artwork, and some even have tropical fish tanks.

Computers and Internet Connection

A trader may spend considerable time in selecting his preferred markets and how (and who) to use to enter orders. One commonality in today’s world, however, is that the trader’s main tool is his computer hardware and internet connection. Traders will often spend most of a startup budget on this area, utilizing multiple screens with at least two high speed internet providers. The last thing a day trader wants to happen is to lose trading connections with the stock markets he is trading.

Capital

Profitable stock trading cannot be achieved without capital from the outset. Whilst stocks can be traded on margin (effectively borrowing money to leverage potential profit opportunity), even experienced traders who are beginning a new life day trading from a home office require time for strategies and trading methods to bed in. This means that startup capital needs to be adequate to cover living expenses as well as business costs as this process takes place.

Trading strategies and risk management

Day traders employ disciplined trading strategies to control their positions, style of trading, and profits and losses. This includes controlling stock trading and money management risk. Developing and adapting trading strategies removes the loss making emotionally charged trades that force unnecessary losses on the stock market trader.

Summary

Successful day traders may have different personalities and trading styles, but they all start with a plan. Continuing success requires concentration and discipline, and adaptation and flexibility. But a life making profit from trading the stock market starts off with a plan that is targeted in its approach and considers all the basics of any winning business plan.