Day trading is an enticing and profitable endeavor that is gaining popularity among people from all walks of life due to its simple concept and promise of large profits in a short period of time. And the concept really is straightforward, in theory; day traders buy stocks at the start of the day for a certain price, sell them when the price increases, and they make a profit.

Still, the theory is, alas, only a theory. Most new traders quickly realize the unfavorable statistic that approximately 95% of day traders lose more money than they earn. Gary Trades, a highly successful day trader and self-made millionaire, argues that these stats are crooked because they don’t take into account that most of those day traders who fail and give up are not following the rules of trading. He explains that most new traders focus on maximizing their profits and in the process forget to manage substantial risks inherent to day trading.

With over five years of trading experience, Gary Tradesgained a reputation as one of the best volume-based and emotionless traders, and for him, these three practices are crucial for increasing the odds of success.

Do Your Homework

According to Gary Trades, before even opening the trading account, traders should know what they are getting into. “Knowing before starting is crucial because it will help traders understand the risks they are exposed to and manage those accordingly,” he says.

“They should read books and articles on trading to learn about the rules of the game; join communities if available, like chat rooms or forums, to share ideas with other traders and to be exposed to the different markets and trading styles.”

Start Small and Trade With Money You Can Afford to Lose

As Gary Trades warns, “Many new traders think that they will start with a large amount of money and have a 100% success rate. This is one of the biggest mistakes a trader can make.” What he proposes is that instead of losing all their assets in a single trade, traders should put small amounts on each trade and follow a daily stop-loss level. This way, they will have a chance to recover from a single loss, and this is important since most new traders lose on their first trade.

Do Not Day Trade When Emotions Are High

The third rule is to avoid trading when one is emotional. “It’s crucial to understand that the majority of new traders lose money because they allow emotions to get in the way, and ultimately don’t know how to manage their risk,” explains Gary Trades. “They get too excited when they make a few bucks, but then panic and end up losing everything when the market inevitably moves in the wrong direction.”

Gary Trades shares one more piece of advice for everyone who is looking to get started in the trading world: try to see the bigger picture and always follow the rules. “Trading won’t turn you into a rich person overnight, as on some days you will win, on other days you will lose money,” he says. “However, if you follow the rules of trading, you will increase the odds of success, and that is the ticket to your first million.”

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