Here are a couple of thoughts:
First, day trading is not for everyone. In fact, it's not for most people. You can get hurt badly, very quickly. Everyone is different, everyone has a different trading style. Some people can see good short opportunities. Some can see good longs. There are only a few ways to make money, there are a lot of ways to lose it. I'll let somebody else get into how to make the money.
Here are a few things that a BEGINNER can do wrong:
1. Mistake: start trading before you have practiced. I would be very familiar with the setup and I would trade on a simulator for at least 2 weeks, a month would be better. If you are trying to make a living at it, and are trying to day trade instead of some other way of making money, you will probably fail. Take enough time to completely understand the system you are using, because you don't want to learn it when you are long a stock that is going down one point every 10 seconds.
2. Mistake: start trading by trading 500 or 1000 shares. I guarantee this is suicide. Start by trading 100 shares or 200 shares. The first time you short some stock 1000 shares and it spikes up for 3 or 4 points and you can't get your buy cover off, you will learn this the hard way. The easy way is to trade 200 shares until you get good. Good means 5 winning days in a row in real life.
3. Mistake: trade light volume stocks. If you do this, you will get hurt, I promise. Trade stocks that have a daily volume of a million shares or more.
4. Mistake: trade a stock that has more than an eighth spread. Don't do it. Just don't do it. If you are on the wrong side on a trade with a quarter spread, you will be down a half in a heartbeat. Hollywood Global Internet is up 14 points in 2 minutes? It's 45 x 46 1/8? Why not just have Mike Tyson bite your ear, it's less painful.
5. Mistake: watching a losing trade get worse. Decide what your limit for the loss is and get out if you see that limit. A reasonable limit would be around 3/8 for a beginner. If the trades goes 3/8 against you, get out. If you are down 5/8, you don't have to wait till you are down 2 points to get out. Get out. If it turns around and goes your way, that's OK. You made the right call at the wrong time. Try to do the next trade at the right time.
6. Mistake: exiting a winning trade at the wrong time. You want to sell into strength and buy into weakness when you exit. If you have a long position and the stock runs fast, don't wait till it stops and reverses, because your winning trade will turn into a losing trade and you willl not be happy. Conversely, exiting a winning trade too soon is annoying. But not nearly as annoying as losing money.
7. Mistake: averaging up/down. Once you learn the game, you can do this, but not when you start. If you made a bad call, get out of the trade. Just get out of the trade and move on.
8. Mistake: trying to trade like someone else. The person you learn from is successful. So, you need to mimic that, right? Yes and no. Everyone is different. The person who is teaching you AVOIDS MISTAKES, but they are not your mistakes because you are two different people. If you are being taught by someone who is not trading right now, you are being taught by the wrong person. Learn from someone that is doing it, not someone that is teaching it.
9. Mistake: holding something that went against you "till tomorrow". You will probably do this and learn the hard way. In the beginning, just get out of your bad trades. Trust me on this. One day will turn into two weeks and your buying power will be gone and if you are very lucky, the stock will come back to where you originally had it and you will get out for no gain.
10. Mistake: holding a winner overnight. Don't do it when you start. It's a bad habit. Don't do it.
11. Mistake: trying to make up for a bad trade with another trade on the same stock. Doubling your position on the second trade to make the money back you just lost. This is gambling. Let the trade come to you. You screwed up, so clear your head and let the next trade come to you.
12. Mistake: chasing a short down. This is a really good way to get hurt. Sometimes it works. Most of the time it doesn't. If you wanted to short the stock at 20 and it goes to 19 3/8, you missed it. Let it go. After you have been trading, you might be able to do this, but not when you start.
13. Mistake: chasing a long entry up. Same thing. You wanted to go long at 20 and the stock is at 20 5/8. You missed it. Don't chase it. The easy money is selling it to you.
14. Mistake: trying to find a trade after you just made 3 losing trades. If you just made three losing trades in a row, you need to take a walk and relax. Maybe you need to stop until tomorrow. 3 losers in a row = stop. Figure out what is wrong and either correct it or stop for the day.
15. Mistake: being in two trades and looking for a third. If you start day trading and can watch 2 trades and look for a third, you will be a millionaire in less than 12 months, but I doubt that you can. Why not just watch one trade at a time. ONE TRADE or two at the most at the same time when you start.
16. Mistake: not asking for help if you run into trouble. You bought a stock and then you bought twice as much instead of selling your original position? It happens. You are long, and the machine says you can't sell because there is no downtick? It happens. Don't sit there like a deer in the headlights, scream! Someone will hear you. Don't let a mistake take your money away while you sit and watch like a zombie.
17. Mistake: getting emotional because you lost money/exited at the wrong spot/missed a trade/etc. This is the best way to lose every penny you have. If you get emotional, you will get nuts, and if you get nuts, you will get scared, and when you are scared you will lose money every time.
I'll be back later. TLC
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