So what is a veteran trader anyway? Is it that trader that NEVER makes mistakes? Is it the day trader that wins all the time? Maybe it is, maybe it isn’t; it’s hard to say. I will say this: the veteran trader is still a human being and being a human being will make ANYONE less than perfect! A fact is a fact folks, you can be a great heart surgeon, but you will still make mistakes, errors in judgment, and you WILL screw up. I have been the lead oil trader here at the Oil Trading Group (OTG) for over 5 years now and yes, I still “screw up.” What are my biggest mistakes? Well, there are many, I’m HUMAN – what can I say?
I’m not quite sure I want to call them screw ups (though they are), but they are definitely struggles that even veteran traders deal with on a regular basis. I think the most important things ANY trader, whether veteran or new to the day trading business, deals with is discipline, patience, and being ready for the trading day. So what is discipline anyway?
Stick to the Plan
In my opinion, discipline is the ability to stick to your plan no matter what arises with NO deviations. Whether you need to wait for the trade to come to you, stop day trading at a certain time, or even WALK AWAY when you reach a certain limit whether it is profit or loss. Having the discipline to adhere to these basic day trading rules is still a major challenge for even the veteran day trader.
Staying disciplined is very important in day trading because when we fail to stay disciplined (I call it the root of all trading evil) it can lead to bad things for the day. A big one for many day traders is NOT sticking to their trade plan for the day. A great example is when veteran traders have a plan for the day, the plan doesn’t go their way, and they DEVIATE from their plan. Just like a football team, there needs to be a strategy and a plan to defeat the opposing team. When this plan “goes south,” let’s say the team decides to deviate from the plan. While this is all well and good, changing the plan in the middle of the game is not a smart idea. I equate changing a trading plan mid-stream to throwing a “Hail Mary” pass in a football game; it could win the game, but it IS still a Hail Mary (lower probability).
Learn to Wait
Patience and discipline go hand in hand as well; even veteran day traders will fall short of practicing the art and science of patience. Day trading is an exciting business and just like anything that involves excitement, we can become impatient. Failing to exercise patience, let’s say waiting for the trade our day trading plan specifies, can lead to premature entries and stops because there’s the fear of missing out on an opportunity. Although veteran traders are experienced, just like everyone else out there, patience can still be a challenge.
The Home Office is Still an Office
Another huge mistake that veteran traders can make is NOT being ready for the day trading day! Let’s face it, most of us work independently from home and we can pretty much write our own schedule. While this offers day traders a great lifestyle, even the veteran traders need to be careful not to become too relaxed in our day trading business. When I talk about being ready for the trading day I’m referring to being ready to work as if you’re going to a regular 9-5 job for someone else; would you go to work without taking a shower, having a cup of coffee, and having something to eat? Day trading is a business and should be treated as such; you wouldn’t show up to work in your pajamas, would you? As we become veteran traders and we begin to reap the rewards that day trading the futures markets has to offer, it’s easy to become relaxed; after all, for the veteran trader, the commute is often from your bedroom to your home office.
Screw ups, accidents, mistakes, or whatever you want to call them are going to happen to even the most seasoned traders out there. The key to these “screw ups” is to not only try to eliminate them but to learn from them as well.