Moving Money and Managing the Mental Fear of Day Trading

Many investors presume that share day trading is all about the money. It is- kind of. Day trading is obviously about making money, and the presumption is that6 investors who are not making money are not doing well at it.

Though this mostly true, it does miss a big component of day trading. It is not all about the money on the day to day. Investors who get caught up solely in the money part will become overwhelmed and downtrodden when these numbers almost inevitably do not move in the right direction. What does this mean in practice?

Moving Back to Basics

Investors who focus on the money part will invariably get distracted. This is partly due to the fear of loss. They are afraid of losing the money they worked hard to earn. Many investors will diminish these concerns by having two (at least, two) wells for their money. This is often designated as the active bank and the reserve.

There are other definitions and terms, but the basic idea is as follows. Investors have a pool of active money to work with. This is the money they can trade with. The other portion of the finances stays where it is unless certain conditions are met.

Moving From Active to Reserve

A common example is to have an active bank of $100,000. Investors may have a much smaller pool to work with, and that is okay. The reserve has $250,000. When a day trader reaches a total active pool of, say, $200,000, they can then add $50,000 from their reserve. When they reach new peaks for their active allotted funds ($300,000, $1 million, etc) they can continue moving more.

Other investors may prefer the opposite approach. They will move all their profits to a reserve account. The method details do not matter as much as the basic system breakdown. It is an effective strategy for day trading without increasing that fear component.

Markus Heitkoetter is an expert in the area of day trading. Visitors can see LinkIn profile for more information about his history and where he came from to be as successful as he is.