There are some major day trading mistakes that just about every new trader will make early on in their career.  The ones who survive are those who can recognize these mistakes and take corrective action.

The first mistake many day traders make is to skip the planning phase of the day or a trade.  Every day you sit down in front of your monitors you should have a general plan for the day.  You should understand the major trends and support/resistance of the major indices, and the stocks you plan on trading.  In addition to that, once you see your stock setting up for a trade you should have a plan that includes an entry, a target and a stop-loss before you even pull the trigger on the trade.

Another mistake that we often see in day trading is the inability to exit on a losing trade.  If you have issues with getting out of the market when your pre-planned loss has been hit on your own, try using stop-loss orders.  Never. Never ever ever move a stop loss order once it’s been placed.  This requires some discipline but it will save you tons of money in the long run.  You should never be hoping that your stock will turn around, and go where you expected.  You should be executing your plan to the letter.

On a similar note, you also never want to move your targets.  If you keep moving your target away from the stock’s current price, you’re never going to take your profits.  A typical day trading exit strategy is to take profits at predetermined levels as you proceed into green territory.  This means that before you’ve entered the trade you’ve chosen two or more targets.  You exit a portion of your trade at each target.  Now, if you think your stock is going to trend for the day, you can plan for that too.  This is called a trade-to-hold.  It doesn’t mean you move your target, but rather you try to stay in the trend by setting a trailing stop.  A trailing stop can either be automatically set at a certain percentage or point value behind the stock price, or you can mechanically keep moving your stop loss up to obvious points of resistance or support behind your trending stock.

Here’s another common day trading mistake; not waiting for your planned trade to play out.  Many traders get antsy about taking their profits as quickly as possible.  This can sometimes be exacerbated by a losing trade, because the tendency is to want to break even.  After you’ve lost some money, but finally hit a winning trade, people want to grab that profit as soon as they hit zero again.  This is pretty foolish, because you’ll never make any money if you’re aiming for $0.  Another reason we see people leaving the market early is that their stock stalls between their entry and their target.  If the price doesn’t just run in a perfect trend to their pre-planned exit point, they start to rationalize an early exit by projecting their fears onto the market.  The market doesn’t care about your fears though, and your logic was sound.  Let the trade play out as planned, and you will profit in the long run.

Finally, a common mistake, even amongst veteran traders, is the need to be in the market, whether or not there’s a trade.  This is called over trading.  If you start rationalizing entries and trades on paper thin logic, you are probably over trading.  If the market is flat, or whip sawing, and you have money in the market, you’re probably over trading.  If you find yourself pulling the trigger on trades that you almost immediately regret, again, you’re probably over trading.  If this sounds like you, try simply pulling your hand off of the mouse.  Sometimes when you’re scanning the market with that finger right on the trigger, it’s difficult to resist that entry, but if you can recognize a trendless day, simply spend the day as a passive observer.  Watch the SPY, or some other general market indicator, or play around on Stocktwits, but there are just some days that you just shouldn’t trade at all.

This is only a few of the mistakes in day trading.  People can lose thousands upon thousand of dollars trying to learn how to day trade for many more reasons than I’ve listed here.  The day trading success rate is low because road to success is full of pitfalls.  As stated previously, the ability to recognize and correct your mistakes will determine whether or not you succeed in the long run.