Day trading, also known as intraday trading is a set of trading strategies which involve opening and closing of trade in a single day. It is an act of buying and selling financial instruments in a single day or maybe multiple times on the same day. It is a risk-taking game and may not be very advantageous game for beginners if they don’t give it proper attention. It is essential to play safely in such kind of situations.
Points to remember while day trading:
If you want to increase your chances of gaining a profit, you must keep few spots in mind. The key points are mentioned below-
- Start with a small amount- As a newbie; one must start with small amount of money. They must begin with a maximum of one to two stocks in a single session of day trading. One must first learn the patterns of trading so as to increase their opportunities.
- Put aside a certain amount of money- While putting the capital on trade one must keep in mind the risk he is about to undertake. Therefore, it is very important to keep a surplus amount of capital aside so that you can be prepared to face any kind of loss. One must be saving a considerable amount of money.
- Cut losses with limit orders- There is no price guarantee as such because when you place an order in the market it is executed at the best price available at that particular time.
- Knowledge is essential- As we know knowledge is power, so it is, necessary to have the correct understanding about trading. It is not just vital to have basic knowledge about the trading but also the knowledge about the current stock market scenario. It is necessary to stay updated on the latest stock market news.
- Set aside time as well- Money is not the only thing which needs to be kept apart while trading. One needs to keep time alone as well. The primary key to selling is moving fast. One cannot treat is an option and spare little time for it. One needs to keep track of all the opportunities for trading as quickly as possible for gaining a right amount of profit. Look over these helpful tips and tricks in forex trading.
- Selecting the right time for trading- The opening time of the market is a volatile period when the newbie must avoid trading. They must first understand the pattern of trading for the first 15 to 20 minutes. The middle hours usually are less volatile. The rush hours offer opportunities so the beginners must avoid it.
- Avoid penny stocks- Keep away from penny stocks since they are very illiquid and therefore the chance of hitting the jackpot is bleak, as we are looking for deals and low prices so we must avoid penny stock.
Daytrader worden, (said as to become a day trader in Dutch), one must keep the above mentioned critical points in mind. It is essential to go slow and play safe since it is a risky game which involves a lot of mind work.