Page 26 - Psychology Course Study Manual

“Day Trading” in it's truest since means to only trade during the day and close out all your open

trades by the time the market closes. So, when you finish trading for the day, your trading

account is "flat" and is "all cash" meaning no positions are being held over night. This is “Day

Trading” in the purest since. There are many shades of gray in defining “Day Trading.” Some
traders use 30 minute charts and hold positions overnight and call this “Day Trading” because

they are using an intraday chart to base their trading decisions. Thus, they consider

themselves “Day Traders.” I actually would consider them short term position traders or even
perhaps overnight "Swing" traders. So, for our discussion here, let's use the purist definition for

“Day Trading,” we do not hold positions overnight.

To be successful in trading regardless of the time frame, you must have an edge, and once you
have it, stick with it to be a consistent winner. In “Day Trading” this is especially true since your

time frame is so short, that you must know your edge very well. As a “Day Trader” you must

decide on how you are going to trade, what is your edge. Are you going to trade intraday

trends or are you going to scalp? Deciding how you are going to trade will depend on your

personality and beliefs about trading.

But realize when trading on such a short time frame of say one minute, 5 minute, or even 10

minute time frames, “Day Trading” takes a lot of energy, and can be emotionally

draining. Some days after I “Day Trade,” I feel like I just played an intense tennis matches or a
game of intense golf. And “Day Trading” is much like competing in sports! Because in “Day

Trading,” you are definitely competing against other traders during the day. It is not buy and

hold where an investor depends on the fundamentals to make money. It is a game where you
play to win, just like in athletics! “Day Trading” surely is a zero sum game meaning that for

every winner there is a loser.

Many good “Day Traders” in fact are athletes, but athletes like Tennis Players, Golfers, and
sports where individual competition vs. team playing are emphasized. Why is this? Because

individual athletes that place winning solely on their shoulders can candle the stress of Day

Trading where winning is squarely on the trader's shoulders. There is a difference from that of