Part 2: Envying
Other Day Traders
By Ultimate Trading
Laziness And Inattention From Day Traders
Lazy day traders are certain to become losing day traders. Inattentive
day traders neglect to research and monitor their positions and markets,
so they dont have a good sense of what strategy to employ. Lazy day
traders dont have a concrete plan, and trading without a plan is
one of the surest ways to lose in any market.
Lazy day traders might buy a stock because they see that it's been
going up steadily for a week and a half. They don't know why, but
they do know the experts say its a "strong" stock. They buy it in
the morning, it goes up a few percentage points, and the day traders
assume theyve made a winning trade.
To the day traders surprise, the stock does a falls in the afternoon
and starts going down as steadily as it went up in the morning. The
lazy day traders can't figure out what went wrong. Why did it fall?
If they'd simply bothered to check the earnings calendar, they'd have
seen that the company was scheduled to report earnings that day after
the market closed. The steady run-up was in anticipation of the earnings
announcement, and now day traders were taking profits and getting
out of the stock in case of a negative reaction to the earnings results.
What should day traders do in this situation?
Emotional Stress On Day Traders
- Know why a position is moving.
- Know why you're buying into the position.
- Check basic information on the position.
- Once you're in the position, watch the market, check for news,
and monitor the positions behavior throughout the day.
- Know what events are coming so you can anticipate changes in
the positions direction.
Here, the rule is simple that all day traders should know: If you're
sick, emotional, or cant properly focus due to outside events, don't
trade. Take a break. The reason is simple. If day traders trade when
they're not feeling well, physically or emotionally, they won't trade
well. They'll just lose money. At the very least, they'll be too distracted
to trade successfully.
Day traders must learn that knowing when not to trade is an important
form of discipline they must learn. This discipline is also necessary
on days when the market is so directionless and choppy that no trade
is going to go anywhere. But the main point here is to be in good
enough touch with your emotions that you can recognize when youll
be unable to focus properly.
In any case, it's healthy to get away from the market for a day or
two, or even a few weeks, from time to time. The time away will help
you regain perspective about what things in life really matter. And
if you need to trade every day, it may be a sign of an unhealthy addiction.
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