This is a guest post from Marc Pearlman.
When people ask me if they could be successful at day trading, my first response is, "Do you know what day trading is?"
Most people don't. You might think day trading is about finding the best online brokerage, grabbing a stack of financial reports, arming yourself with financial blogs and news and then diving in.
What many would-be day traders don't realize is that success doesn't come from the uncanny ability to analyze balance sheets and fundamentals like Warren Buffett. And even if you have the ability to interpret charts and price action--the primary skill for day trading--this is secondary to having the strict discipline of adhering to specific rules and guidelines.
Without these rules in place, day trading is like a child playing with a chainsaw.
I'm not judging the merits of day trading. I know both very successful day traders and those who blew themselves up financially with day trading. (For what it's worth, I know many more of the latter variety.) But if you're going to succeed at this kind of investing, you'd better understand what it takes.
What it takes to succeed
Here are observations from my experience as both a professional trader and money manager about what it takes to succeed at day trading:
- Hard work. Brains don't hurt, but day trading is a skill, and that skill needs to be developed by treating this as a business. A lot of people day trade as a side avocation or hobby, maybe because it seems