Day Trading Tips and Tricks You Need to Know
There’s always room for the improvement if you are a trader, especially when starting out. Professional traders are continually looking to improve themselves and become better each day.
10 Day Trading Tips You Need to Know
1. Knowledge is Power
First make a wish list of stocks you’d like to trade, keep yourself informed about the chosen companies and general markets, analyze a business newspaper and visit reliable financial websites on a daily basis.
2. Set an Amount Aside
Assess how much capital you are willing to risk on each trade. Set aside an excess amount of funds that you can trade with and are prepared to lose while keeping the money for basic living, expenses, etc.
3. Set Your Aside Time
Day trading requires the time. Don’t consider it as an option if you have restricted hours to spare. The process requires a trader to track the markets and spot opportunities, which can arise any time during trading hours. Moving fast is key.
4. Start Day Trading with Small
As a beginner, it is suggested to focus on a maximum of one to two stocks during the day trading session. With just a few stocks, tracking and finding the opportunities is easier.
5. Avoid Penny Stocks
You are looking for deals and low prices. But keep away from the penny stocks. These stocks are highly illiquid, and chances of hitting the jackpot are often bleak.
6. Time Those Trades
Many orders placed by traders and investors begin to execute as soon as the markets start in the morning, contributing to the price volatility. A seasoned player may be able to recognize the patterns and pick rightly to make profits. But as a newbie, it is better to read the market without making any moves for the first 20-25 minutes. The middle hours usually less volatile while the movement begins to pick up towards the closing bell. Though the rush hours offer the opportunities, it’s safer for beginners to avoid them at first.
7. Cut Losses with Limit Orders
Decide the type of orders you use to enter and exit trades. Will you use the limited orders or limited order? When you place a market order, it is executed at the regular price available at the time, thus, no “price guarantee.” A limit order, while, does guarantee the price, but not the execution. Limit orders help you trade with more precision wherein you set your price for buying as well as selling.
8. Be Realistic About Profits
A strategy does not need to win all the time to be profitable. Many traders only win 50% to 60% of their trades. The point is that makes more on their winners than they lose on their losers. Make sure the risk of each trade is limited to a specific percentage of the account, and the enter and exit techniques are defined and written down.
9. Stay Calm
There are times when the stock markets test the nerves. As a day trader, you need to learn to keep hope, greed and fear at bay. Logic and not emotion should govern the decision.
10. Stick to the Plan
Successful traders have to move fast, but they don’t have to think quickly. Because they developed a trading strategy in advance, along with the order to hold to strategy. In fact, it is far more important to follow the formula closely than to try to chase the profits.