Habits Of Hope: Success in Day Trading

Special Episode

The Habits of Hope: Cultivating Success in Day Trading

Do you remember the reason you got into trading? For most people, it was a very simple emotion. Put simply, it was Hope. Hope that you could find financial freedom, hope that you could make the kind of money that would free you from a life of debt.

Hope is what brought all of us into the trading arena, igniting our passion for the market and fueling our aspirations for financial independence. But hope, without the support of sound habits and a disciplined approach, can easily transform into bad decisions, impulsive trading, losses and a feeling of hopelessness.

To keep your hope alive, you must have the habits of hope.

A boxer learns how to dodge his opponenet’s punches in milliseconds becuase he has had thousands of punches thrown at him again and again in training. Over time his body creates “muscle memory” and instinctively responds to the dangers of the punches being thrown at him. Just watch a Maywather masterclass if you’re not sure what I mean.

For traders, good habits create good muscle memory. Habits of hope, rooted in research and insight from experienced traders, serve as a guiding compass, steering individuals towards a path of informed decision-making and long-term profitability by avoiding the market’s punches and only taking positions when the conditions become favourable to us.

Habit 1: Embrace Continuous Learning

"The markets are constantly changing, and so must you. The key to long-term success in day trading is a commitment to continuous learning." - Mark Douglas, Trading in the Zone

Everyday is a school day in the markets. You need to be ready to understand the complex and ever-evolving ecosystem. Futures trading constantly presents new challenges and opportunities. Any trader who wishes to navigate this dynamic landscape effectively must commit to continuous learning. This involves immersing themselves in a wealth of knowledge sources, including books, articles, online courses, and webinars.

There isn’t any particular person I would recommend you read, instead I suggest you consume every and anything. A good starting point of course is my daily reviews and educational episodes, but beyond these you must do your own research, you must become a master of all the indicators that you intend to use in your strategy.

Habit 2: Develop a Trading Plan and Strategy

"A well-defined trading plan is your roadmap to success. It outlines your risk tolerance, trading instruments, and entry and exit criteria." - Brett Steenbarger, The Daily Trading Guide

A well-defined trading plan serves as a roadmap for day traders, providing a framework for making informed decisions and avoiding emotional trading. This plan should outline the broader context of each day, specific entry and exit criteria and favourable and unfavourable conditions to be long and short. You can access my free daily plan via the discord each morning before the New York open.

A sound trading strategy, aligned with the trader's risk profile and market conditions, further enhances decision-making capabilities. What elements need will you use to define a good entry? How will you determin direction? Knowing your buy and sell signals is a must.

Habit 3: Practice Discipline and Emotional Control

"Discipline and emotional control are essential for success in day trading. Traders must resist the temptation to chase after quick gains or let fear dictate their actions." - Michael J. Carr, The Complete Guide to Day Trading

A future episode I look forward to writing one day is how trading for me was much harder than most other people. Conquering my ADHD and being in control of my emotions during the trading day has been by far my biggest challenge.

Day trading demands unwavering discipline and the ability to control emotions. Traders must resist the temptation to chase after quick gains or let fear dictate their actions. Instead, they should adhere to their trading plan, making decisions based on sound analysis rather than impulsive reactions. Easier said than done but it takes time.

Habit 4: Only Enter On A Green Light

"Before entering a trade, day traders must have clear reasons to take the position, analyzing indicators, scanning the DOM and technical charts." - John Carter, Mastering the Trade

Pressing that buy or sell button should come at the end of a very clear and very thought out process. Your mental checklist should be aligning with the price action to give you a clear idea of what is the most likely next action. Is this a higher low or lower high? Is this a green or red delta candle? Is this consolidation or price discovery? Of course, you will have times when all these elements can align and you can still be wrong! But knowing what triggers your buying and selling is a must.

Habit 5: Embrace Risk Management

"Risk management is not about avoiding risk; it's about managing it effectively to protect your capital." - Anne Marie Murphy, Think and Trade Like a Champion

Risk management is the cornerstone of successful day trading. Traders must establish clear risk parameters, including position sizing, stop-loss orders, and profit targets. These measures help mitigate potential losses and protect capital. If you aren’t using small positions, if you are moving your stop when the move goes against you, if you don’t have clear predefined bracket orders then I can promise you, you will never make it.

Habit 6: Seek Feedback and Review Your Trades

"Day trading is a journey of continuous learning and improvement. Traders should regularly review their performance, identify areas for improvement, and seek feedback from experienced traders." - Steve Nison, Japanese Candlestick Charting Techniques

I think the quote from Steve Nison above says it all. Day trading is a continuous learning process. Traders should regularly review their trading performance, identify areas for improvement, and seek feedback from experienced traders. This reflective practice fosters growth and enhances trading skills. Traders should also maintain a trading journal to document their trades, analyze their performance, and identify patterns. This should happen daily and forms part of your end of day routines.

Conclusion

These habits of hope, when nurtured and cultivated, empower you to navigate the complexities of the financial markets with confidence and resilience. Each of the above elements should be something you are thinking about every day, follow these habits like a religion. After 12 months of relentlessly practising them, you will find yourself stronger in your conviction, more consistent in the setups you expose your trading to and hopefully, more profitable.

Much love,

PW

What Is Apex Prop Trading?

I found my consistency using them. I wrote about it in detail here. Don’t risk your own money until you are a consistent trader. Use Apex instead for as little as $20 a month.

Click here to find out more and get a 71% lifetime discount with code UDIUNIWD

What Do All Your Lines Mean, Pauli?

If you are stuggling to make sense of the review’s terminology, then take some time to understand The Way of The Walnut.

What are Walnut Footprints & Sierra Chart?

I explain how to read my footprint chart here. You can download and use it for free!

I wrote a detailed breakdown of how to sign up for a 14 day free trial of Sierra here.

How Do I Get Into The Walnut Discord?

I want to grow our discord communities (clubs) so that they are self sufficient and a place of safety for newcomers. To do this we operate under a slow-growth policy, but to be added to the waiting list click here.