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Day Trading: Faulty Assumptions and Expectations

Tony Peterson

There's no doubt that day trading offers an extremely appealing alternative to more conventional ways of earning a living: no boss, no employees, no co-workers. What could be better than that? Well, let’s add “easy” to the list. Now we're talking! Day trading is “easy”, right? Our inner-monologue may continue on something like this: “With just a few hours a day, I can earn unlimited amounts of money." Other businesses may require a great deal of after hours work, but day trading doesn’t seem to require any. The only question then becomes, "What should I do with all my free time? Work on that golf swing? Contemplate the nature of dark matter? Get reacquainted with my family and friends?”

Now that we have established how easy it is to day trade for a living, we just need to get started. Our beliefs about trading continue: “It has a relatively low barrier to entry; I don't need to invest in inventory, advertising, or other steep upfront costs. Even better, it's not difficult to find a ‘qualified’ day trading teacher who can tell me when to push the button. I am on the right track, reading all the books by 'successful traders,' watching videos, spending a lot of time cross-checking information on forums, joining trading rooms, buying systems, but… (wait for it) losing a ton of money!

Perhaps this sounds familiar to you. This was my story. The more I thought I was learning, the more everything seemed to make sense. So, how was it that I was losing money? What I discovered was that I'd become victim of conventional trading "wisdom." I had incorporated all of it into one attractive picture of what I thought trading was all about. I wasn’t sure if I did this on my own by picking up impressions on trading as I researched, or whether this was being presented to me by the trading gurus from whom I was trying to learn. One thing was for certain; there was no shortage of “successful” traders out there who were eager to appeal to my faulty expectations and assumptions of what I thought a trading career was all about. They were more than willing to profit from my naivety without providing the true trading education that I needed.



The important point here is that we all construct our own trading careers based on our early assumptions. Each piece of the puzzle that we accept and use to fill in our understanding along the way reinforces our earlier conceptions (or, more likely, misconceptions) about trading. Our struggles in our trading careers are directly related to the foundation of our hopes and dreams on faulty day trading assumptions. Therefore, as traders, it is critical at every step that we take an honest look at where we are today and recognize the role that our past assumptions and expectations have played.   

The good news is, if we alter our conceptions just a little bit, we can change our trading for the better. In upcoming articles, I will describe in more detail what some of the common misconceptions are and how I personally turned it around to create a successful trading business. The method is simple and should be easily applicable by anyone who may be experiencing barriers in their own trading careers.

But before you move forward to read more, I want you to write down your expectations of trading. Maybe you've read some in this article that sound familiar. Write down what you imagine your trading career to be like. Once you have done so, set that aside and continue reading.