Day traders are highly professional people that follow strict discipline. As a newbie, you should know the following tips to be steps-closer to your day trading goals.
Always remember that knowledge is power. This also includes information about basic trading procedures and tools.
You also need to learn about the following:
- The stocks you plan to trade.
- Company financials
As a newbie, you got to do your homework. Make a list of stocks you want to trade. Then, try to know the latest news about them as often as possible.
It’s important to be realistic about your profits. That means you shouldn’t lose out on decent gains just because you’re chasing for more.
Markets are tricky. That’s why it’s better to settle for smaller profits than risking huge losses. Don’t be afraid of feeling like you lost out on a chance.
You can always buy the same stock when it slumps. After all, even small profits can feed your confidence. They also give you a chance to try out a strategy again.
Day Trading on Margin
When you trade on margin, you borrow money from a brokerage firm to trade. If you can use it properly, margin can help boost your trading results.
On the other hand, margin can also magnify your losses. And trades can easily go against you and result to disaster.
As a newbie, you have to keep control of the amount of margin you’re using—or don’t use it at all. You have to first try indulging in trading without margin.
Entry and Exit
Often, knowing when to enter as well as walk out of the trade help you rake in profits. Never try to play it by ear. In case the market turns sour, cut your losses by exiting the trade.
Number of stocks
As a newbie, you have to focus on a maximum of one or two stocks every trading session. With just a few stocks, finding opportunities is easy.
If you try to trade multiple stocks at once, you may miss out on chances to exit at the perfect moment.
Most orders that investors place start to execute the moment the market opens in the morning. That contributes to price volatility.
A pro may be able to see patterns and pick properly. However, a newbie will be better off just reading the market without any moves in the first 15 to20 minutes.
The middle hours are usually less volatile. Movement begins to pick up again as the end of the session nears.
Day Traders Funds
As we all know, day trading is risky. You can lose your capital. As a newbie, you should set aside an amount that you can trade with. You should also be ready to lose this fund.
Needless to say, you should not use the money for you basic living expenses. This will ensure that you won’t go totally broke if you lose your funds.
Control Your Emotions
The markets, no doubt, will get on your nerves. If you want to be a great day trader, you should learn to control your fear, greed, and unrealistic hopes.
You should base your decisions on logic and not on emotions. This can be difficult for beginners, but it is a must.