Day trading, simply put, is opening and closing a deal in the same day. For those new to trading, however, it doesn’t mean that you can only trade during the day! The forex market, for example, is open somewhere in the world at all hours of the day. But day trading is where short term deals are made. As prices fluctuate during the course of a day, the trader can learn to take advantage of both dips in prices as well as highs. So there is money to be made at all hours, but knowing when, where, how and how much are the questions that need to be answered beforehand.
Learning the Market
As easy as it looks, any day trader who is making good money has spent a lot of time learning, studying, watching and testing. In this day and age, that is not difficult to do as there are many reputable online courses or newsletters that trading wannabies can subscribe to or enroll in. There are also any number of day traders who have learned the “secrets to success” who are more than willing to share a portion of their knowledge with you. Find the best teacher or advisor for your style and learn. Don’t set foot near a trade until you’ve learned how day trading works!
Starting Out Slowly
When you’ve done some dry runs and you feel like you’re ready for the real deal, it’s wise to start small. Put your foot in, get it wet and get out. Then put your foot in again, leave it a little longer and get out. Begin small so that you can record what you’re doing, track your successes and failures and learn from them. Of course no new day trader would start off making trades that might empty the bank account, but putting in too much money is always a threat. Especially after a run of losses, a trader might keep throwing money into a losing game, expecting a huge win. From the very beginning, set aside a specific amount of money that you can use and afford to lose. It doesn’t matter how much you have in your trading account, most day traders wouldn’t risk more than one or two percent of that amount on each trade. So at the end of the day, if most of your trades have not earned you profits, you will at least have remaining funds to continue trading the following day. You haven’t lost all your account. The same goes for setting stop losses and limits. Don’t get carried away trying to make a huge profit by not keeping your stop losses set accordingly.
Putting Away Emotions
All day trading begins with a plan. Whatever plan you come up with or whatever trading style you feel comfortable with, stick by it. Don’t fall prey to quick emotional impulses that will cause you to get off track and risk money on trades that don’t line up with your plan. When trading, leave your emotions at the door!