Day Trading Psychology
A Rational Unspoken
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Daily Trading Log
If you put on a trade and your heart starts pounding, you are *not* ready to
trade yet...Some people who aren’t ready to trade have other problems as
Pulling the trigger to get in
Staying with one trading strategy long enough to judge it
Letting good trades go bad
Day trading psychology plays a role in these issues, and books have been
written to help traders deal with these problems, but most of them do not
offer a practical solution.
In order to be successful at
day trading support and resistance,, you must have
confidence in your trading strategy. Most traders with less than 2 or 3
years of experience, and for those who are just starting to
day trading…well, they have nothing to be confident about. (But, there is a
strategy that really helps inexperienced traders, so don’t be discouraged,
we’ll talk about it in a minute.)
If your trading strategy isn’t making you money consistently, in “real
time”, you can’t have confidence in it. But, how can you tell if your method
is any good when you don’t yet have the nerve and discipline to trade it?
Day trading psychology involves building confidence, and consistent,
profitable results will lead to confidence. Being a
30+ year veteran trader,
day trading advice
for you would be to trade your strategy in simulation
mode so that you can judge it rationally. The inexperienced trader (and even
some traders with years of experience) has a difficult time thinking
rationally when they are afraid of losing money, so take that fear out of
the equation by utilizing simulation trading as a tool.
Some “professional” traders will tell you that simulation trading is useless
or even, “the worst thing you can do.” But it depends on why and how you
utilize simulated trading. If you choose a simulation strategy that has a
defined number of setups, a fairly specific strategy for limiting losses,
and you stick to that strategy like glue, never deviating from it – then
simulated trading is a logical way of testing your method in real time and
it will help you greatly.
Day trading psychology also involves self control. Cultivating good habits
such as self control, and developing confidence while using a simulation
method will help you when you’re ready to trade for profit.
Having confidence in a method you have traded in simulation mode is the most
rational starting point for a new trader, or any struggling trader.
So begin the successful part of your trading career with a strategy that you
personally have learned to trust through real-time trading (preferably
Not all trading strategies are alike when it comes to
psychology, and this is important to understand.
Any strategy that loses more than 60 % of the time (such as a
trend-following system) will take enormous courage to trade, no matter what
you do. These strategies demand a certain type of person (rich, with ice
water in their veins).
Thousands of strategies force you to place a fixed stop and wait to see
if it gets hit. These are difficult to trade with confidence – even IF you
can find one that wins more than 65 - 70% of the time and makes money in the
process. That’s a big IF. You can spend a career and thousands of dollars
searching for success with this kind of strategy, most unfortunately end in
My method for
support and resistance trading
is rarely talked about, but aside from making money for me on a consistent
basis for more than 30 years,
it just happens to have a rational approach to day trading psychology built
Here’s what I’m talking about…
The fear of trading is associated with the lack of
With most strategies you can control only a few aspects:
You can learn to control your entries through discipline and strict setups.
You can limit the size of each loss somewhat by using fixed hard stops.
You can control your overall chances of success by finding a strategy that
works for you in simulated mode BEFORE you trade it with money.
You can control the days and times of day you trade.
You can control the number of contracts you trade, placing more money at
risk on your highest-probability setups, and less on your lower-probability
day trading futures don’t know how to control the overall size
of their losses. Learning how to do this is the most rational way of dealing
with fear, greed, and other problems of day trading psychology, and it’s the
main key to my own success as a trader.
Remember this simple rule that will build your trading confidence like
** Exit any trade that doesn’t go your way immediately. **
Forget about the commission, forget about how many hours you waited for the
setup, forget everything except this rule. I know it’s radical, but just do
Then YOU will be in control of the one factor that most traders don’t
believe can be controlled – the downside outcome of the current trade you’re
The first rule is used in combination with the second rule…
** Every trade starts out as a scalp until proven otherwise. **
This means that if you get 2 or 3 ticks gain and the market pauses and moves
a tick in the wrong direction, you get out immediately with 1 or 2 ticks
gain…. No questions asked.
This simple rule gives you control over your gain/loss ratio, another thing
that most traders believe is beyond control.
I trade around support and resistance levels because they are built in to
every liquid market. They arise primarily from the day trading psychology of
people who are trapped in a bad trade and want to get out at break-even as
soon as possible. This feeling does not change from year to year or from one
generation to the next, so
day trading support and resistance can never
become a strategy of the past.
I write a daily market report where I give tomorrow’s support and resistance
levels, including my own trading plan, as well is intraday updates.
Experienced, professional traders have used my
RBI Trader’s Updates since
1996 because I’m accurate and my trading plan works over the long haul.
Subscribe to my RBI Updates and see how my support and resistance levels and
market analysis will help your trading - no matter what method you’re
There’s never been a better opportunity to turn the corner and become a