Since I am getting a little bit pumped out on day trading and moving out from a long term investor, I did a little bit of research on the rules and strategy to get my head in the game right, especially during this pandemic era. The market has been swinging, and in no way, there is a logical correlation with the increasing number of new coronavirus cases, and unemployment benefit claims. While everyone is trying to adapt to the new norm, I can’t be ignorant of the fear that haunts me every time I walk out the door. I resort to sitting behind a screen, a safe space to study the market, something that I had a nick of since I was a kid.
So what are the basics that I should know and incorporate in my trading strategy to minimize risks of losing my hard-earned cash?
Money Management – The most important thing to do is to understand the risk per trade, and prepare to take losses. A good friend of mine told me that trading is about winning the majority of it, not all of it. The basic rule is 1% of capital in line per trade. So the objective is to start small and learn the charts to find entry and exit points.
Time Management – Being a part-time trader while keeping a full-time job is not easy, and the market is not going to wait for me. Constantly monitoring the market may be a challenge, but the idea here is to build consistency in entering the market and exiting my position. I live on the west coast, and having that 3 hours lag works in my favor. My game plan is to enter the market in the morning when it is most volatile and exit in before lunch. I may create a position at the end of the trading day, but that may take around 30 minutes.
Education – This is something that I have been diligently doing, spending time reading articles on trading strategies, analyzing charts, and watching videos on stock picks. As a beginner, this is the most crucial part for me to get it right, to reduce my risks, and to increase my return on investment. A friend of mine also suggested reviewing trades weekly to learn from my mistakes. In my mind, it is school all over again. Some of the websites that I find useful for trading ideas and indicators;
If I had acquired the skills to trade much earlier, I would have an edge to take on the market now. A lesson to myself is always to make time for passion. COVID19; while it comes with a lot of sadness and tears to those that were affected, it gave back time to most of us. Time for us to reassess our priorities for the rest of the days we have in this world. Time is something that cannot be bought; it cannot be wagered with God, and it is not in endless supply.
Use time wisely, stay safe, stay home, and wash your hands!