So you want to get into day trading? A great opportunity for a decent profit. But there are a few things you will need to keep in mind.
First, let’s look at what day trading is. Day trading is the act of buying or selling a financial item within the same day. Thismay be done a number of times in a single day. The goal is to benefitfrom even the slightest movement in price, resulting in incremental profitability.
But there’s a lot you’ll need to know before you can succeed in this field.
You need to continually update yourself with stock market news, be aware of events that affect the stock(s) of your choice and to understandbasic trading procedures. You’ll want to look out for economic outlooks and ratings, plans for interest rates, and any other specific financial news.
You’re going to be busy with a lot of reading.
When it comes to day trading, setting a small amount of your money aside is essential.
Figure out how much of your money you’re willing to risk. Set aside a surplus that you can use for trading and are prepared for the possibility of losing. Of course, don’t try to compromise the funds you require for everyday living like utility costs.
In other words: only put money forward that you caneasily afford to lose when you day trade.
Day trading eats up a lot of time. In fact, between the reading and monitoring, you’ll probably spend most of your day on it. Move fast, keep focused, and don’t consider doing this if you don’t have lots of spare time to focus on it.
Avoid penny stocks. These are difficult to turn into cash.
Start small. Leonardo didn’t start out with the Sistine Chapel. Tolstoy didn’t begin with War and Peace. You don’t need to start with the big stocks. Instead, just start out with one or two stocks per session. This lets you get a feel for how you like to work and slowly get used to finding opportunities.
Timing is highly important.
If you’re an expert, timing your action at the opening of the market is feasible. This is because you know the patterns and can pick the right move to exploit them. If you’re new to this, you’re better off waiting and observing.
The middle hours of the trading day are less likely to burst into a flurry of activity. This lets you sit down, check the data and process things at a calmer pace. You don’t have as many opportunities, but you have more time to think. You can always speed things up later on.
Sometimes, you need to cut your losses. Be realistic and accept that you aren’t going to make a million dollars per day. Most traders with experience get about 50% to 60% of their trades as profit. The core point here is to make more money with what you win rather than focusing on what you may lose on a bad trade. This is not often a get rich quick scheme, but rather one of strategy, skill and patience.
If you have a plan that’s working for you: stick to it. Don’t let emotions deviate you. Follow a working formula closely, rather than chasing profits.