Day Trading Strategies for Beginners
There is an ongoing game in the market. It involves buying and selling financial instruments within the same day. Experts call this Day Trading. And this act of buying and selling can happen multiple times during a day, taking advantage of small price moves. It’s a lucrative business when done correctly but it can also be tragic especially for beginners. There are principles in the playbook for this trade.
Know how the sausage is made
Like many other trading practices, day trading requires thorough understanding. Traders must know patterns in the market so they know when to buy and sell. These fellows study the basic procedures, of course, and keep up with the latest news on the stock market, state policies, and the economic environment. Reliable news outlets and business-related publications are your best friends. Keep a list of the stocks you want to trade and how each economic unit might react. Before striking the hot iron, learn first how to strike.
Be prepared with your time and percentage
Given that day trade requires constant updating of stocks within the entire day, traders must be willing to devote time to it. Quick moves are required and that’s how a wise trader plays. If you’re a person already occupied with so many things to do in a day, you might consider day trading the least option. In addition, be ready with risking percentages of your account. Trade involves wins and losses. Have a surplus amount of funds to trade with and even funds that you’re prepared to lose.
Walk before you run
Sure, the trading game can get you excited. But it may cause greater damage if you jump into a bigger number of stocks right away. Beginners start with a maximum of one or two stocks in a session. This allows better control and monitoring of stocks. It also becomes easier for beginners to find market opportunities when they have lesser number of stocks to take care of. Once you get the hang of it, this is where you build up and improve your game.
Observe, observe, observe
If you have been in day trading for quite some time, it becomes easier for you to notice patterns and predict them. However, for a greenhorn in the game, it is a skill to observe the market first before stepping into it. It’s easy to get carried away the moment the market opens in the morning. This is when orders of traders and investors begin to execute, making stock prices volatile. But for beginners, it is advised to read the market in the first 10-15 minutes before making a move. Stock prices are less volatile during midday and this is a safer time for beginners to play.
Profit reality checks
Strategies don’t have to win all the time for it to become profitable. Most traders win only 50-60% of their own trades but it doesn’t necessarily translate to lesser profitability. These traders become so by winning more than what they lost. Be on the lookout for the risks taken that they do not exceed your decided account percentage. Above all, wise traders have entry and exit methods are clear cut and written down.
Mind over emotions
It’s a competitive and quick market in day trading. Stock markets, investors, prices, and traders will test your patience the most. Wise and successful day traders know how to keep their emotions at bay and not letting these negativity eat them up. Day trading is a game for the mind, not the heart. This only makes sense for logic to rule over emotions when in the arena of day trading.
Gameplan is gameplan
Skilled day traders move fast but don’t think fast. Does this confuse you? As said earlier, successful traders have a blueprint of their plans in mind. This blueprint contains the techniques and strategies to arrive at the goal. Circumstances may change within the day but a good trader sticks to the plan that has good strategies in countering potential loss. And while you’re at it, you should know that discipline to follow the plan is also a character possessed by successful day traders. Remember to “Plan your trades, then trade your plan.”
It takes time, patience, and discipline to master the art of the trade. With constant evaluation of performance, one can improve tremendously over time.
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