What is day trading?
There was a time when the only active or day traders were the ones who were working for big financial institutions, training houses, or brokerage firms. Well now, that is not the case anymore. With the emergence of new technology, better internet connections and speed, and online trading houses, every other individual trader can choose to be a day trader.
Day trading refers to implementing intraday strategies to make a profit from short term piece fluctuations of the assets in the market. A wide range of mechanisms and techniques are implemented in day trading to reap profits from ineffectual markets. Day trading mostly involves analysing the market through technical indicators. If done properly with objectification and self-discipline, day trading can turn out to be a very fruitful career. But it can prove challenging to new traders who are not ready or lack planned methods and strategies to implement the trade in the best way.
Here are some of the most handy and useful tips associated with day trading.
Tips for day trading
1. Setting aside the funds
In day trading, you must estimate the percentage of your total capital that you are willing to invest in a single. Most of the time, day traders go with one to two percent of their total capital to be invested in each trade. So if your total capital is 50,000 dollars and you are ready to invest one percent of it in a trade, then the maximum loss on that trade would be one percent of 50,000, i.e., 500 dollars.
2. Keeping up with the market
Besides knowing the basics of day trading, one needs to keep up with the happenings in the market, every hour, every minute. Big news announcements can change the whole course of trade for a day trader. Knowing about such announcements will either help you earn more profits, or keep you safe from the risks. Other important things to remember would be interest rates, economic viewpoints in the market.
So it is useful if you continuously do your homework and be updated about the market changes in the market. Please make a list of stocks or securities that you would wish to trade, and stay updated about their movements in the market.
3. Setting aside time
The reason this intraday security exchange is termed day trading is that it requires ample time of your day. Most of the time, it would require nearly all of your day. Therefore, you must be passionate about trading. Otherwise, it is not worth it.
The process of day trading requires you to track the market and securities you are meant to trade every now and then.
4. Ignoring penny stocks
It is good if you are looking for profitable deals, low prices, but try to stay away from penny stocks. Penny stocks have the lowest of liquidity, and there are meagre chances of high profits. Many such stocks are not even listed on leading stock exchanges and can only be traded over the counter. If you have done proper research and see a real scope, then only go for penny stocks.
5. Starting with minimal
If you are a beginner, then you should trade just one or maximum two stocks in one trading stretch. Tracking ad research a few stocks is simpler as you begin with day trading.
“Fractional share trading” has also become very popular these days. It involves specifying smaller portions of amounts you would want to invest in the trade.
That memes if a share is being traded at 250 dollars and you wish only to invest 50 dollars in that share, then the broker will let you purchase a fifth of that share.
6. Have realistic expectations
Most of the expert and professional traders win only up to sixty percent of their trades. For a strategy to be profitable, it does not have to be an all win-win. Make sure that you mitigate and limit your risk on each trade. You must also clearly define the entry and exit points of your trade, in your trading strategy.
7. Timing your positions and trades
The main reason for price volatility in the market is that as soon as the market opens every day, the positions and trades placed by different investors begin to be in effect. It is therefore essential to be precise about your timings to reap high profits in day trading. An expert may recognise the patterns and movements more appropriately to reap profits in the day, but for a fresh trader, it is good to keep shut for the starting thirty minutes into the day and see how the market pans out. The mid hours of the day are said to be less volatile, and the market again picks up the pace during the closing hours.
Conclusion
It is important to keep the above mentioned day trading tips in mind, especially if you are a new face in the market. One must also remember to stick to their trading plans instead of altering it every now and then looking at the fluctuations taking place in the market.
If you are inquiring for an online broker to facilitate day trade or any other trade, then we would suggest that you go with HFTrading. HFTrading is a regulated broker function in Australia and New Zealand. They deal in a wide range of securities like forex, indices, stocks, commodities, metals, and more.
More Information:
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