First, let’s first be clear about the objective of this post.
I want to lay out what I feel is the most effective step-by-step plan for becoming successful at day trading.
I have spent the last 25 years teaching traders to day trade Fibonacci using Nexgen Software Services T3 Fibs ProTrader™.
During this time, I have seen first hand what works and what does not work in the real world. I have witnessed 10,000+ traders make the same mistakes over and over, and only when they actually take responsibility and follow the correct path will they finally start to see fruits of their labor – a.k.a. turning a consistent profit.
I will start by saying day trading is difficult, some people are not suited for day trading, and you should read through all disclaimer and risk statements and really assess your financial fitness before learning to day trade.
- The objective: trade for a few hours each day and make a bunch of money every single day until we are rich.
- The problem: easy to say, hard to do.
- The solution: I feel the following is the most comprehensive, sensible plan that I personally teach and preach daily that has created successful real-time traders.
We will go on three key assumptions:
- You have enough trading capital.
- You have the time needed for learning.
- You have an insatiable will to succeed at day trading.
That said, let’s get into what I feel is the best, fastest, and most tried and true approach to winning.
First, the things that you must have or do.
- You MUST have a winning methodology. Period. If the rules you are going to trade do not win more than they lose, you will fail, guaranteed — the only guarantee in trading by the way! You have two choices: develop your own method, which will take no less than 3-5 years of trial and error, or purchase one that is already proven.
- Your method MUST be simple. If your method is so complex it is not easily repeatable day in and day out, you will always find a way to self-sabotage your trade with doubt, fear, and variables.
- You MUST have a mentor to train you on the correct way to apply the 3 basics of day trading, which are: trade selection, entry timing, and trade management. It is very important that you do not discount this step. Having a coach is a tried and true practice and a must for the top performing and paid professionals in the world. Can you imagine a pro athlete without a coach? Of course not; however, 95% of day traders think they can read a book or rent or buy some software and outperform the rest of the world with little-to-no skills. Keep in mind, pro athletes make the type of money day traders want to make. Do not go it alone or you will find yourself one of the statistics you hear about. Winning is learned, not natural.
- You MUST practice this one winning trade so many times that you can teach it to others and you can see the trade setup rules in your mind and on the screen prior to them happening. Note: everyone recognizes the correct trade after it happened,. You will not get paid for knowing what just happened, you will only get paid if you can position your trade for what is about to happen.
- You MUST be able to execute your trade without fear or regard to the consequences the outcome will produce.
- You MUST start small. Stock day trading is one of the worst offenders in the world, in my opinion. They demand $25,000 dollars in the account before they will let you trade. That is insane. No one without trading skills should be allowed to play with that much money.
My personal instruction and plan looks like this and always starts with this reminder.
Profitable trading is a skill and cannot be bought. You can pay for a method and you can pay a coach, but in the end, if you do not apply the method properly, this is where the breakdown occurs.
Be realistic with yourself. Learning to trade successfully, confidently and profitably will take the average novice 4-6 months to get decent (potential to win money), 1 year to get good, and 2 years to get great.
When evaluating a new software program, signal, teacher or service, please give yourself at least 5-10 days of learning the method and doing some serious due diligence before you decide to spend any money on it or the coach. If you don’t see the obviousness of the plan and the way in which you will apply it, do not do it. Nexgen included. You must understand what you are going to commit yourself to. Then, once you have opted to go forward, give yourself at least 30 full days of assembling the method in your own mind and on paper.
Exactness is now paramount.
- EXACTLY what trade will you do?
- EXACTLY what will every rule be for this trade?
- EXACTLY what rules will you never attempt? Everything except your trade.
- EXACTLY when, where, why, and how will you enter this trade?
- EXACTLY what is your maximum stop on any given position?
- EXACTLY when will you move your stop to minimize risk?
- EXACTLY when will you exit your trade?
- EXACTLY what are the nuances that you will have to contend with, if any?
Once you can answer each of these 8 questions, you then start on what most find to be the most difficult part of the journey. You must now trade this method and perfect its real world application.
In my experience, this process NORMALLY takes 3-6, months depending on the trader. This is HORRIBLE. How can it be that you won’t be successful in a few short days? Rest assured, you will be 6 months older in 6 months anyway, and you might as well have some phenomenal day trading skills.
Think of how many hours professional athletes practice one move one play or one skill. One-hundred thousand times? A million times? You are about to put your money at risk against potentially hundreds of thousands of predators that have trained their entire life to take your money from you. If you fail to practice and prove the method works and you fail to gain enough repetitions to have an unshakeable faith in your trade, when you have losses, and worst yet, consecutive losses, you must be able to pull that trigger again, without fear of consequence or result.
FAILURE TO PRACTICE and build that unshakable confidence is the #1 reason traders fail. They just want to make money so bad, they start trading before they are ready. As much as you may wish to eat the cake, you can’t eat the cake when it’s still in the oven. YOU WILL NOT MAKE MONEY with a plan that is half-baked… don’t do it.
You must also get feedback on your trading and execute this plan on a simulator so you are practicing the method without the financial risk. Anyone who tells you that you have to risk money to learn the rules of a trade is a fool and someone you should run from as quickly as possible. This is also where the coach comes in — you must submit your rules and your trade and make sure you are doing it correctly. If you practice the wrong trades, you will not get better at the right trades. In my experience, most traders are so fearful of being wrong they would rather lose money for 2 years in a row than swallow their pride and ask for feedback. Those who quickly get on board and get through those exact 8 steps tend to make money the quickest.
When you are finally ready to trade live, START SMALL! Stock day trading with $25,0000 is insane. It is my opinion that with a very strict trading signal, tight management, and proper execution, you should be able to start day trading futures with as little as $3,000 in your trading account. IF YOU CANNOT make money with $3000, YOU WILL NOT make money with $25,000 dollars. If, for any reason, you lose more than $1,000-1,500, you should probably head back to the simulator and the coach and figure out what you are doing wrong. Once you have figured it out and spent more time on the simulator, fill your margin account back to $3,000 and start over again.
You should make consistent money day trading the signal you spent 6 months studying with the smallest amount possible. If it wins and as your testing and practice shows, with the leverage of futures trading on markets such as Crude Oil or Stock index futures such as the S&P 500 E-mini’s, you will be able to compound your small trading account into a small fortune.
Come see how Nexgen teaches traders how to recognize the “one look” that will generate very high probability winners with its Fibonacci day trading software.