The Unforgivable Deadly Day Trading Sin

The Unforgivable Deadly Day Trading Sin

I hope that title caught your attention. There is so much you can do to prepare for success in day trading. No matter how much you prepare and practice though, many things can still go wrong during a trade. You expose your money to risk with every single trade. But, there is one unforgivable deadly day trading sin you must never commit. Never. Ever. It’s called chasing the stock.

Wise day traders never chase stocks. You chase a stock when you try to purchase shares while their price is increasing significantly. Successful day traders aim to enter trades during the quiet times and take their profits during the wild times. That, of course, is the total opposite of how amateurs trade. They jump in or out when stocks begin to run, but grow bored and lose interest when the prices are, shall I say, sleepy.

Chasing the stocks is an account killer for beginners. You’ll lose your money. You must wait until the price of a stock finds its high point, and then you must wait for the consolidation. The consolidation period occurs when the traders who bought stocks at a lower price are selling and taking their profits while at the same time the price of the stock is not yet sharply decreasing because buyers are still entering into trades and the sellers are not yet in control of the price.

I know that’s a mouthful to understand. Basically, when you see a stock’s price surging up, you patiently wait. It’s too risky to buy a stock when the price is increasing significantly. As soon as you see the price start to break up, that’s when it’s safe to begin purchasing. Patience truly is a virtue!

Successful traders are patient. Very patient. They understand that they don’t have to be in every move. You wait for opportunities that you feel comfortable and confident about. It’s not enough to simply buy a strong stock. The entry price is extremely important. You must enter a trade at a price that offers you the best low risk entry yet high reward potential. Do not trade a strong stock that has moved away from a good risk/reward entry price. That is called chasing the stock.

Chasing stocks is the deadly unforgivable sin of day trading. Missing a trading opportunity will not lose you any money (just an opportunity cost), but chasing the stock will. Do not let one mistake cause you to lose money with another one. Be patient. Be thoughtful. Be precise. Be successful. That is how to day trade for a living.