With the popularity of Forex trading and the success of new crypto currencies listed on different platforms backed by a passionate community, day trading can be very lucrative to the well informed. However, for new traders looking to break into the market, this can be dangerous if you do not have a well thought out strategy.
Based on my experiences with day trading, I would like to share some points to help catch new traders up to speed:
1. Control your nerves before you buy in
Do your best to keep your ambitions, emotions, and fear in control. Use your research and logic to guide your decision, ALWAYS.
2. Set a realistic goal
Record your method and what you want to get out of your trades. Realize that most experienced traders only win half of the time. So starting out, try to set a hard stop and limit the percentage that you want to buy on your account. You will be in better control of your losses this way, you will understand the market better, and you will ultimately make a final decision on whether this market is viable or not. Try to make a list of all the stocks from the companies you are more interested to invest in. You will find that it will not be so daunting to purchase shares if you do so with a company you believe in.
3. Do not lose tract of your target(s)
Do not try to chase every single potential profit you hear about. You need to stick to your plan and disregard any news that will cause you to steer off tract. These “gold rushes” are merely backround noise that can cost you if you let your emotions control your actions.
4. Choose your time to trade
Usually, in the middle of day is where your will see less volatile trades. The mornings and evenings are the most volatile trading periods since many investors are active at these times. If you are starting out and trying to get a feel for the market, perhaps analyzing the market at noon is a safer route. Keep in mind that being more modest with your trading can make day trading more time consuming. This is true since you will not be putting all your savings but just your earnings from your previous trade (unless you are following a compound interest chart).
5. Do not go to big at the beginning
Starting out, I only chose to purchase one share at a time. It helped give me a feel of opportunities that were showing up. Another way to purchase shares is by partially buying shares to help lessen any losses you might have which many stock brokers allow.
*Disclaimer: I am by no means a financial adviser, this is from my own experience so please trade responsibly and at your own risk.
