Day trading means buying or selling a financial instrument within a day either once or multiple times. It is lucrative for those who understand how to make gains from small price moves. However it is risky especially for new comers without a preset strategy. Day trading is profitable when it is taken seriously and focus is placed on strategies, principles, quick succession and thorough knowledge to comprehend charts and market patterns. Let us look at key strategies to become a successful day trader.
Knowledge is cardinal
Learning is the prime most strategy for day trading. Before commencing day trading it is recommended to take up a professional course to learn about trading. Apart from the basic trading knowledge, day traders should keep updating themselves with world economics, daily financial happenings and stock market news to be able to succeed.
Manage your time
Day trading calls for setting aside dedicated time. Unlike other trading which can be done at your convenience, day trading happens in the market’s functional time.You need to track the markets, spot opportunities and act quickly. Therefore managing time efficiently is a very important strategy.
Plan your capital
Setting aside funds to trade is advisable. Since day trading involves risks it is important to predetermine what percent of your capital you are willing to risk. Most traders do not risk beyond 2% of their capital.
Small and steady steps
Start small when it comes to day trading. As a beginner do not focus more than a couple of stocks per session. To get a better grip it is easier to track opportunities with fewer stocks. Be consistent in adhering to your trading strategies. A steady approach is much better than a hasty chase to profits.
It is essential to stay calm and not let your emotions ride you to take a decision. As day trader one needs to think and act logically and keep greed or fear as far as it can be kept. Day trading for a beginner may be overwhelming until you understand, plan and practice your strategies. Enough emphasis cannot be placed on proper prior planning in order to avoid chaos. Most established day traders swear by the saying, ‘plan your trade and trade your plan.’