Reports of people making huge gains in stock markets are the success stories heard around the world. So obviously this has attracted many first time investors to the stock market.
Day trading is one of the systems gaining in popularity with investors, but, day trading is riddled with risks. Though you can make huge gains in day trading, you are also likely to lose huge money.
However, if you have the need to give day trading a shot, here are some basic tips to get you on your way:
What is a “Day Trader”?
A person who actively participates in the stock market, buying and selling many times a day to exploit inequalities and make quick profits.
1) Study Basic Market Systems
Study the basics of the system like the working of the market, which way the stocks will move, the long and short calls, and the time to buy and sell, along with learning to take care of the profits while reducing the losses.
2) Utilize Trading Simulators
Since mastering day trading is a time consuming process, use the trading platforms and simulators available on the trading websites before you actually start.
3) Accept Losses
Do not let the thought of losses scare you, realize they are a part of the game.
4) Minimize Losses
Pay attention and minimize your losses through good decision-making and methods like stop orders to reduce your losses.
5) Manage Your Profits Wisely
Once you have earned your expected profit and fulfilled a plan, stop trading. Do not enter into unnecessary high risk trades to ride a string of good luck and blow your profits.
6) Limit Risk
If the market does not meet your expectations on any particular day, do not try to force success, stop trading and regroup.
7) Avoid Extremes
As your experience in day trading increases, you gain the ability to foresee the direction in which the stock price moves. But do not go for the topmost or the lowermost stocks.
8) Patience is Key
If you find it difficult to decide how the market is swinging, do not trade be patient and find an opening.
9) Collect Data
Maintain records of your results when trading. This will allow you to learn the things, which are effective, as well as ineffective.
Look to great traders; learn their buying and selling tactics. They usually sell when there is good news and buy when there is bad news, try to identify their patterns and information sources.
11) Check Your Heart at the Door
Do not get emotionally involved in trading; stay cool aloof and professional.
12) Develop Instincts
Develop good instincts and then Rely on your instincts. Depending excessively on the analysis means missing out on some good trading chances.
13) Learn Professional Strategies
Keep reading and soaking up information, learn and use top strategies that the big dogs use.
14) Start Small
Concentrate only on select stocks. Focusing your attention on multiple stocks will make it difficult for you to track the movement of each stock.
15) Read 24/7
Never stop reading. Anything associated with trading and the companies involved, read it. Never stop reading and accumulating data in your brain!