Many day traders, like myself, learn day trading on our own. We learn from free resources, and some trading books that we buy from the bookstore or borrow from the library.
This is a cost-effective and exciting way to learn.
However, with the myriad of resources out there, you might be at a loss as to where to start. These 3 lesson plans will point you in the right direction in your day trading education.
1.0 – Day Trading Foundation Modules
This is the first lesson plan which introduces you to day trading.
1.1 – What is Day Trading?
Let’s start the lesson with a basic understanding of what day trading is about. This part of the course is not demanding, but very important. It will lay the groundwork for your further studies.
- Understand what is day trading, including its related topics and its risks
- Find out if you really want to day trade
- Watch this video on “What is Day Trading?” from Investopedia.
- Read “Day Trading: Your Dollars At Risk” by the U.S Securities and Exchange Commission.
- Visit the almighty Wikipedia’s entry on Day Trading. Do not attempt to understand everything. Just scan through and get an overview of the topics.
- Read the book “Day Trading For Dummies” for a comprehensive overview of day trading. (Optional, but strongly advised.)
If you decide that you still want to give this challenging job a try, continue to the next section of your learning journey.
1.2 – What is Technical Analysis?
Technical analysis is an important part of day trading, so we should get familiar with it before we continue.
- Understand basic technical analysis including its tenets, chart types, and basic chart formations
- Gain exposure to trading jargon for advanced modules covered in the next lesson plan
- Read Investopedia’s 12-part series on technical analysis.
- Study Technical Analysis: The Complete Resource for Financial Market Technicians (2nd Edition). Read chapters 2, 11, 12, 13, 14, 15, 17, and 18. Complete the review questions that follow each chapter.
Now, you have gotten your feet wet in the world of technical analysis and trading. It is time to move on to more specific day trading topics.
2.0 – Day Trading Advanced Modules
This lesson plan covers the advanced topics that day traders will work on and hone constantly.
2.1 – Trading Strategies
Day trading strategies are your hunting tools. Keep working on them.
However, do not try to trade too many strategies concurrently. Focus on one trading setup that makes sense to you.
- Select day trading strategies that make sense to you
- Test the day trading strategies
- Go through our Trading Setups. (Yes, we are biased, but we really think it is useful.) Our reviews refer to the source of each trading setup. Refer to the sources for more trading strategies as needed.
- Visit day trading forums and review the more popular trading strategies .
- Get a day trading simulator.
- Test the day trading strategies that caught your eye.
2-2 – Money Management Models
This is your safety net. Do not start trading live until you have a money management plan.
- Understand why money management is important for day trading and the concept of risk of ruin
- Know the different money management models
- Implement at least one money management model
- Study chapter 23 of Technical Analysis: The Complete Resource for Financial Market Technicians (2nd Edition) on money management.
- Read A Trader’s Money Management System: How to Ensure Profit and Avoid the Risk of Ruin.
- Design your own money management plan. Start with a simple plan for now. For example, risk no more than 2% of your account each day. You can refine it as you go along.
2.3 – Trading Psychology
Trading psychology is what separates the top traders from the rest. It also determines the length of your day trading career.
- Be aware of your emotions while trading
- Recognize common pitfalls like over-trading, lack of discipline, analysis paralysis
- Read Mark Douglas’ books. (Trading in the Zone: Master the Market with Confidence, Discipline and a Winning Attitude & The Disciplined Trader: Developing Winning Attitudes)
- Start a trading journal and reflect on the emotions you experienced for each trade.
3.0 – Day Trading Specialist Modules
Our last lesson plan helps you focus on your chosen specialist track.
Through the earlier modules, you must have realized that there are different nuances and considerations for trading different markets. Now, you get to choose which market you want to specialize in and research further.
The aim is to develop expertise in your chosen market. Hence, we have listed resources to get you started. Now that you are an advanced student of day trading, you can navigate for more resources in your area of interest afterwards.
3.1 – Futures Trading
- Price Action Trading Books by Al Brooks, which focus on day trading the S&P E-mini futures
- Day Trading Grain Futures: A Practical Guide to Trading for a Living
3.2 – Forex Trading
- Day Trading and Swing Trading the Currency Market: Technical and Fundamental Strategies to Profit from Market Moves (Wiley Trading)
- Forex Price Action Scalping: an in-depth look into the field of professional scalping
3.3 – Stocks Trading
3.4 – Options Trading
- Day Trading Options: Profiting from Price Distortions in Very Brief Time Frames
- DeMark On Day Trading Options
Conclusion: Learn Day Trading on Your Own
Learning how to day trade is not an easy task. Learning it on your own is even tougher. This is why getting a mentor might be helpful.
However, teaching yourself day trading is a worthwhile challenge.
After all, day traders must be independent and not worship any day trading guru. And teaching yourself day trading is the best manifestation of your independent thinking.