Laying out a trading plan is often easier than sticking to it.

I spent the last couple of years developing the trading strategy that worked well for me. I had several patterns that I liked to trade, and they were showing consistent results. Some of my favorite trading setups included the well-known Overextended Gap Down strategy, Gap and Crap, and the Microfloat strategy that I like to trade in the afternoon. I was happy enough with them, and my profit chart was showing continuous growth.

However, the only problem with having a tried and true trading strategy is that you don’t see the right patterns very often. Sometimes, you don’t see a single proper setup for weeks.

At first, that seems alright, and waiting is not that much of a problem. That’s what discipline is for, right? I usually don’t have any issues waiting for the right setup for a week or two, but that’s a sure way to get bored and restless. So I’d be having no trades in the span of 2-3 weeks, and I’d feel fine, but then something would change. And that’s how I’d start trading random setups, losing money, and feeling more discouraged with every loss.

Impatience has its price. In November 2019, I noticed that my profit chart started moving in the wrong direction.

At first, I was stuck at the support and resistance level for a really long time, having trouble breaking out of it to reach a new hight. But then the chart started going the wrong way altogether, and I didn’t like that at all. Of course, that put a damper on how I felt about day trading and my general experience.

Back when I started, a lost trade didn’t mean a huge loss for my account. I started at 100 shares, so I wasn’t risking much. As I was finding more consistency and gaining confidence, I’ve been slowly increasing my share size. Over the course of two years, I’ve gone up to 2000 shares. At this point, the stakes were higher. The reward could be greater, but so was my risk. 

Additionally, trading has its hidden costs. Your broker charges commission fees and has a subscription plan that you need to pay for. Chances are, you are also subscribed to various services and educational programs that help you trade better. And since I’m a short seller, I have to pay for the shares that I borrow. All that adds to the list of expenses that need to get covered by the successful trades.

That is why seeing a profit chart should normally be a motivating experience, especially when you’re day trading full-time. Ideally, you should feel like it’s all worth it, that you’re learning and getting better at it. And when the numbers are not great, there is an issue.

After admitting the problem, I decided to get back on the path of discipline first. I made a commitment not to trade anything but my proven setups.

I’ve also opened a paper account with my broker for practice and play. However, it hasn’t provided me with the same feeling that real day trading gives. It’s way easier to be perfectly rational and logical when there’s nothing at stake. No risk or reward means that nothing is affecting your judgment, so I found myself trading in an entirely different way. It means that this experience does not always directly translate to the real day trading, so it doesn’t have the same teaching value.

Another solution I considered was testing setups with a really small size, risking no more than $10 at a time to make $20-$30, and seeing how it works out. At first, it seemed like a great idea since that amount of money is close to negligible no matter if I win or lose. It meant that I could practice as much as I wanted without terribly messing up my profit chart.

But this is where I get reminded that I’m only human. A loss is a loss to my brain, no matter if it was only $10 or $600. Another complication I ran into was the fact that I had the urge to retrade my losing setups to prove that I’m right, even when I was testing a brand new strategy, and I’ve had no history of being right yet. These are the mind tricks that your brain can play on you if you’re not careful enough. As a day trader, you are trading based on your knowledge and experience. When trying out new setups, the challenge is not to let it turn into emotional gambling.

This is why I was so keen on returning to my day job and restarting my career after I decided to day trade part-time. Having a stable income alleviates the monetary pressure, and now I could practice day trading without counting every dollar and feeling upset over every time I lost. Besides, I really didn’t want to be home 24/7 for trading anymore. As it turns out, I do best when I monitor the market for roughly 30 minutes a day, set up the trade, and let automation take care of the rest. This way, I have fewer opportunities to seek out questionable setups and trade them out of impatience.

The way I see it, more trades do not equal more profit. We all trade differently, so what works for me might not work for you. However, you should keep this idea in mind if you’re only starting out. 

When you follow a reliable day trading strategy, it works out great most of the time. By the way, a strategy can be successful only 50-60% of the time and still be profitable for you if you play your cards right.

When you are trying to seek out and force trades, you start losing more often. The setups don’t always meet all your conditions, plus your attention span has its limits. When your pool of trades is higher, there’s way more room for errors. And continuous mistakes get costly and demoralizing.

Now that I have so much experience, I see the Pattern Day Trader rule, or PDT, in a different light. PDT allows you to have only three trades within the roll of five days as long as your account is under $25k. Many say that it’s a curse and a blessing at the same time. Personally, I’ve met multiple consistently profitable day traders who have started under PDT. Some people with smaller accounts work around PDT by opening 2 or 3 accounts per person, allowing them to make 6 or 9 trades respectively.

Before I started day trading, I was fortunate to have a good career, so I was never under PDT. Back then, I was trading a lot more recklessly, throwing money away, betting a lot, and losing a lot.

But this is the thing: when you have only three trades a week, you are forced to be very selective about what kind of trades you are making. This way, beginner traders don’t want to waste a trade on testing a new setup without having proper experience and knowledge. After all, this is what paper demo accounts are for.

So that was my plan going forward. I wanted to use only the proven strategies to trade and test new setups using the smallest size or my paper account. This way, I managed to move forward, turn around my profit chart, and finally break the resistance level.

Additionally, that was the turning point where I stopped focusing on the profit part of day trading too much. Having a side income is amazing, but this is not the main reason why I do it. I love the process, and I want to keep doing it because of that. I want to be relaxed and patient when trading. I’m willing to wait for the right setup whenever it comes along, even if it doesn’t show up today or this week.

How selective are your trading setups? How many times a week, on average, do you trade? Comment below!