Day Trading Guide

Beginner’s Guide to Day Trading

Struggling to figure out what it takes to become successful day trading?

You’re not alone.

Most of what you read online about trading in general is written by failed traders.

If you’re familiar with Jumpstart Trading (or JT) then you know that we are real traders who publish real results.

I’ve been in the trenches professionally trading since 2003 when I began trading at GPC, the second largest trading firm in the U.S at the time. I made over $700,000 in my first two years of trading.

I don’t say that to brag…I say it to prove that JT is all about real traders who have been in the trenches and produced results that speak for themselves.

The following guide was written to give you an overview of the steps I took to become a successful trader.

Only when you combine the proper trading education with Focus & Discipline, can you become an elite day trader. Here’s how to get started…

Guide Topics (Click to Jump to a Topic)

I Have A Passion for Trading

Trading became a passion of mine at a very young age. “It’s all about the bucks, kid. The rest is conversation…” (Gordon Gekko, Wall Street 1987)

Wall Street instantly had me hooked on the markets. I was lucky enough to have parents who supported that passion and helped me open my first brokerage account when I was only 13.

Back then; the penny stock chat boards were huge. The “Pump and Dumpers” were everywhere.

A classic pump and dump was when an individual or small group of traders would build hype around a penny stock that they already owned, getting the rest of the crowd to buy the stock driving the price up. The “Pump and Dumpers” would be selling into the crowd as they hyped the stock up, pocketing a hefty sum.

I remember being in computer class everyday at school and waiting for the dial up Internet to connect so I could check the quotes.

One day as I was checking the quotes on the stocks I owned and I saw one of my stocks I held 1000 shares of at $0.25 had jumped over $2. I ran to the principal’s office, called my Dad and told him I wasn’t feeling well and needed to be picked up.

The second I saw my Dad pulling up I jumped in the car and said “hurry up get home…I need to sell my stock!” He laughed, and we hurried home. I called my broker Ray and told him to get me out.

I had turned a $250 dollar investment into over $2,000. Needless to say, I was hooked.

I’m excited to share some advice on what to do if you’re seriously considering trading either as a career or simply to make more money.

What Is Day Trading

Besides the best job in the world…day trading is the buying and selling of securities within the same day looking to profit from short-term price fluctuations.

The general public tends to have a negative view of day trading. Most associate it with high risk and crazy people.

Yes…day trading can be very risky, especially for those who haven’t taken the time to properly educate and train themselves.

However, when applying the proper leverage and risk management techniques, I believe that as a day trader I take lower risk than most individuals who invest in the stock market.

As a day trader, I believe I have an edge that a lot of the general public doesn’t when they enter the market.

  1. I don’t hold positions over night which limits my exposure.
  2. I have no emotional connection to the securities I trade. The average investor will invest in companies that they are very familiar with and love.
  3. I know exactly where I’m going to get out. If you asked the average investor where they would get out of their position if the stock they held began to fall they most likely wouldn’t have an answer. Odds are they would wait until the stock had fallen so far and out of fear get out near the bottom of the move.
  4. I make trades based off of statistically proven trading models. In the long run the house always wins…

Mentor’s Are KEY to SUCCESS

Mentors are one of the most valuable resources an entrepreneur should tap into no matter what field you’re in.

Having a trading mentor is valuable for the following reasons:

  1. Learn from someone who walks the walk. When you have a trading mentor, you are learning from someone who has already arrived at where you want to be. They know exactly what it takes to get there and what sacrifices need to be made.
  2. Build your confidence. Anytime you start on a path towards something new, there is going to be a lot of uncertainty within yourself along the way. That’s natural. Some people can overcome that uncertainty by themselves while others can’t. This uncertainty becomes a heck of a lot easier to overcome if you have a trading mentor. Why? Because they will help you to build confidence by showing what you’re trying to achieve can actually be done.
  3. Fast track for success. You can learn to avoid the common trading mistakes and conquer the roadblocks most people face when trying anything new…putting you on a fast track for success.

Mentors come in all shapes and sizes that can handle the myriad of topics that you may be having a problem with.

Most people think of mentors as someone they can physically meet or talk to periodically. Although this is probably one of the most valuable types of mentorship, you can also find a mentor easily by doing some research. In fact, you’re doing it right now.

Where to Find a Trading Mentor

  1. Apply for a job at a trading firm. This isn’t going to be possible for everyone as you may already have a full time job. Trading firms are also extremely competitive to get into and don’t pay much of a draw if any at all. However, if trading is your goal and you have the financial means and flexibility to do it, I would suggest applying to some trading firms.
  2. Research other successful traders. Find someone who has proved their success of their results trading. Find them on LinkedIn, Twitter or Facebook and send them a message asking for some guidance. Find books, blog posts, videos, or training courses that they have published. For example, even though I have never met Tim Ferriss, Martin Schwartz, Tony Robbins, or Jesse Livermore, they are all individuals I would consider to be mentors of mine in one way or another.
  3. Enter shameless plug now. ☺ Find someone like me. Yes, I am a trading mentor, and a pretty darn good one if I may say so. I began training traders back in 2004 at GPC and have been doing it on one level or another ever since.

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Education

Learning to trade really isn’t that difficult. Trading itself is difficult due to the emotions the markets will cause you to experience, which can lead to difficult and erratic decision-making.

Time and time again I see traders constantly on a quest to learn. They learn everything you could possibly know about the markets, how they operate, trade theory; the list goes on and on… All while they continue to fail to become a successful trader.

Education is great…

The problem is that most traders are educating themselves on the wrong topics.

Endless education on chart types, indicators, trading systems, etc…is most likely not going to make you a successful trader. Yet so often when a trader hits a road bump they will say, “I need to educate myself more!”

In all reality what they need to do is focus on trading psychology and learning how their emotions are effecting their trading decisions.

When I began at GPC my training was pretty basic. I didn’t learn about every security I was trading, countless strategies, or how to program algorithms…

I learned if there are more buyers than sellers then price will go up. If there are more sellers than buyers price will go down. Pretty simple… but it worked and I made a ton of money.

To most people the markets seem so mysterious when they actually are quite simple. SO KEEP IT SIMPLE! It’s very easy to fall in the trap of over complicating everything.

This doesn’t mean there aren’t very complicated products, strategies, and theories to be traded. However, as a new trader or someone who has been failing to make money as a trader, this is nothing that you have to worry about now.

What Not To Do

NEVER, EVER, EVER buy any trading product or service from a company who isn’t willing to back it up with proof. You will be wasting your time and money. By proof I mean real trading statements from a real trading account.

When I began to consider starting a trading website I researched my competition and what they offered.

I would email them and ask for some live trading statements or simple proof that they actually trade. To my astonishment I have yet to find one individual or company online that teaches trading, has a trade room, etc… who will give any solid proof that anyone involved with the site has successfully traded in their lives.

These people are nothing more than professional marketers who are stealing peoples money.

One of the things that really amazed me is how these companies present their services. They flood traders with an overwhelming amount of courses, seminars, more plainly put…garbage!

The new trader believes that these scammers are extremely knowledgeable as they begin to fall into the over education trap. This is great for the owners of these companies as they can continue to pump their courses to their members.

“We just released the new XYZ system! Buy It Now!”

The owners of these companies are likely failed traders looking to make money off of the hopes of others.

Find a Strategy and Backtest

Notice I didn’t say to develop a strategy…I said find a strategy.

Most unsuccessful traders have become caught in the never-ending process of over educating themselves and constantly trying to develop the perfect strategy.

There is no need to reinvent the wheel. Find someone who has proven to be successful and learn his or her strategy.

I realize with all the scams online this can be difficult, but there are people out there.

Once you have found a strategy, back test it, and then back test it some more.

Back testing is critical to build your confidence and prove to yourself that the strategy works. This will become essential for when you experience losing trades… which you will. Losing is part of the business.

No strategy is better than any other as long as it works for you.

Accountability

You and you alone are responsible for every single trade you take. If you execute the trade, then you own it; but that doesn’t mean that you will “accept” responsibility or hold yourself accountable for the results.

Many traders blame anything and everyone for their poor results. Yet, funny enough, when they have a winning trade they take all the credit.

These traders continually seek outside themselves for the answers to their issues and shortcomings. Constantly on the search for the “Holy Grail” system, which simply doesn’t exist.

Having several people that you discuss your trading with can help you take control of holding yourself accountable for all of your results. Remaining self-aware is critical to weed out and root out negative issues that are caused by limiting beliefs and unruly emotions that lead to erratic trade executions and trade rule violations.

You can’t change what you can’t face. You can’t face what you don’t know. Plain and simple…

If you focus on accountability by having accountability partners you will get closer to your goal of achieving trading success.

Going Live

How much money do you need to begin trading?

My answer on this is simple… NONE.

Yep, I just said you don’t need any money.

You should be focused on educating yourself and saving your money until you can prove that you are successful on a simulated trading account first.

Only after this step has been done is it time to go live.

If you don’t have any money, I’m confident you can get a few people to back you a small sum if you can prove your results on a simulated account.

At the end of the day this is the same way that I started at GPC. I didn’t have the funds needed to be able to make a career trading at that time. I was broke!

If I was never able to prove myself on a simulated account there is no way the owners of the firm would have backed me with real money.

Take your time, learn the market, and learn your strategy. I think this is one of the main reasons so many traders fail. They immediately trade on a live account and blow through their money before they even know what they are really doing.

Not only will this save you a lot of headaches, you’re odds of success will sky rocket.

Next, don’t ever place money in a trading account that you can’t afford to lose. Trading is 90% psychology and how you can handle the emotions of being a trader. Trading with money you can’t afford to lose is a recipe for disaster.

Doing so results in erratic and indecisive behavior, which leads to losses and a blow up account.

When you are actually ready to go live I believe you should have a bare minimum of $3,000 dollars if you’re trading Futures or Forex and $30,000 if you’re trading US stocks.

The pattern day trading rule on US stocks requires traders to maintain a minimum of a $25,000 account balance to trade more than 3 day trades in a given 5 business days. When you open and close a position in the same day it’s considered a day trade.

The pattern day trading rule applies to U.S. Stocks, not Futures or Forex.

So there you have it! That is a deep dive into the exact blueprint I used to generate over$700,000 in my first two years of trading. Thanks for reading, and I really hope you enjoyed it. Take what you like and use it in you on your own path to becoming a successful trader, then let me know how it goes!

(NOTE: Want a trading crash course—and all the tools you’ll need—to become a consistently profitable trader? Become a JT Member for Free. Click Here.

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Adam
Adam is the founder of Jumpstart Trading. He began is professional trading career in 2003 at GPC which was the second largest proprietary trading firm in the United States. Since then, he has achieved a top 10 performance at a prestigious national trading firm, developed multiple trading strategies and complex trading algorithms, and trained thousands of traders in person and online. He specializes in Index Futures, Oil Futures, U.S. Stocks, and Forex.
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