Day Trading 101 - Take your money and run!

Now it may sound obvious, but taking your profit and running with it is significantly harder than it sounds, especially if the stock you bought has been doing very well. Beating the emotional attachment you have to your shares and money, whether that be greed or remorse from a price drop, is the single most important factor in being successful in stock market investing.

That said, make an account on a virtual stock exchange program like marketwatch’s VSE program and begin this little test of emotion free trading. First, you have to pick out some stocks, preferably in a sector of the market that you know little or nothing about in order to further distance your emotions from this process. Second, do a little bit of research, 20 minutes or so, and pick one stock. Now you see the current price and you think it may go in one direction, great, so buy the shares you want. Next you have to decide what you want to make off this stock, be conservative and keep in mind how much the stock has moved up or down in a day when deciding, and place a good till canceled sell order in at your price. If the stock even starts to drop, sell immediately. If you chose correctly and the stock is on the way up it will sell automatically when it hits your price. If you get your price that’s great, move on to another stock, or go after a new price point on the same stock. All that matters is that you locked in your profit. If you didn’t choose correctly and the stock dropped from your purchase price and you sold out immediately you have lost some but have an opportunity to learn ad see why you were wrong. Spend another 20 minutes finding out what went wrong and finding a different stock to start over with.

Moving on from stock to stock keeps you focused on the next gain and not the ‘I wish I would have hung on to that for another 2 cents‘(every time I’ve waited for those extra 2 cents its gone 5 cents or more the other way) or ‘I was so stupid for buying that stock‘ and keeps the emotion out. Moving on is the hardest thing to do after a loss, just focus on a new stock and start the process over again. In this way, at least in theory, you only have to be right some of the time to make a killing.

By the way, I in no way condone this kind of reckless behavior with real money, test the theory on a virtual, fake money, stock exchange, but what you do with your money is your business alone.