5 Lessons I Learned from Day Trading

Day trading is an exciting strategy that can generate profits in a short amount of time. However, day trading isn't a technique beginners can master easily. So what does it take to be good at day trading? Here are 5 lessons I've learned from day trading so far.

1. Don't Trade with an Overly Large Seed

When day trading, it's natural to think that a bigger bankroll means you can make more money. Some people look at the money sitting in their savings accounts and deposits as wasted, and decide to use all of it as their day trading seed. Some even borrow money. But an overly large seed can lead to bigger losses. When day trading, it's best to start with a small amount, build your skills, and then gradually increase the amount. Don't forget that what matters is not making money, but not losing it.

2. Don't Expect Excessive Returns

Day traders usually have a strong desire to get rich quickly. Because of this, even when they're in profit, greed sometimes takes over and they end up closing at a loss. But keep in mind that even Warren Buffett earned a mere 12% a year. When day trading, it's important to lower your expectations and aim for consistent results. Even small profits can grow into big returns when they keep compounding over time.

3. Don't Fall for the Illusion That 1% a Day Is Enough

If you're a day trader, at some point you've probably promised yourself, "I'll just make 1% a day." With volatile, low market cap assets, that may not seem all that hard. But a 1% daily return is an illusion and a form of greed that's hard to sustain, and it can lead to frequent, poor trades. In the end, you may keep repeating bad trades, wasting money on fees and suffering big losses.

4. Cut Your Losses Without Hesitation

My biggest regret and lesson from day trading is that I didn't know when to cut my losses. I only realized late that in trading, losing less matters more than earning more. If I had prepared an exit strategy in advance using tools like a stop loss, I would have avoided unnecessary losses and regrets. To be good at day trading, practicing cutting losses without hesitation is essential. If you find it hard to cut losses manually, it's a good idea to actively place stop loss orders at the point where your strategy is invalidated.

5. Don't Overcomplicate Your Strategy

There was a time when I tried to apply several strategies at once while day trading. For example, I tried to combine moving averages, RSI, Fibonacci, and more all in one place. But when day trading, it can be better to focus on fewer strategies, sometimes just a single one. It's best to ignore all the noise in the market and keep trading in your own style. That is, of course, as long as you're making a profit. If you keep taking losses, you need to make an effort to identify and fix your mistakes by keeping a trading journal or recording your screen.

That wraps up the 5 lessons I've learned from day trading. Day trading isn't easy. Yes, day trading is hard. But with consistent effort and practice, it's still not impossible to build your own strategy and use it to reach your profit goals.