Day Trading can become a profitable endeavour for any stock investor, but it can be extremely stressful as well. Many day traders fail to find success in the stockmarket, but that does not mean that you can’t do better in it.
There are a few things you can master as a day trader and increase your chances of generating profit. Opening a trading account with one of the best stock-brokers can kick-start your expedition.Now, let’s help you gather some more beneficial tips before starting your day trading journey.
What is Day Trading?
Before going further, let us know about Day trading first. Day trading is all about buying and selling financial instruments within a single trading day. Whenever someone looks to make a profit through small intraday price fluctuations, they are known as day traders. For example, if you buy and sell a particular company’s shares within a single trading day, then you are doing day trading.
Day trading can be a useful strategy for getting rich quickly, but you must be ready to bear significant risks. It is better to decide beforehand, should you be day trading? Or you wish to stick to a long-time investment?
7 Tips to Become a Successful Day Trader
So, here we are going to cover some points to keep in mind while choosing day trading.
1. Have Patience
Let’s first accept that trading is a daunting task. It’s not something one can read and start making money immediately. Right now, many stock related sites allow users to trade using demo accounts.
Even though they are helpful, a proper understanding of the market, how it works is necessary to deduce an effective strategy. Moreover, it will give you an edge over other traders. Hence, patience is essential to do well as a day trader.
2. Having Patience is Necessary but Not Enough
Having patience is the first key to success as a day trader, but that is not enough. It does not guarantee you success. Some people understand finance but still can’t do well in the stock market.
While others may not have a financial background but perform well, what could be the reason? Master the 3Ps to do well in trading; they are patience, persistence, and planning. If you have these qualities within you, then you are on the right track.
3. Consider the Competition
It’s not only you who wants to become rich by earning some quick bucks. Therefore, it is good to consider the fact that the competition will be fierce.
People will try a vast array of techniques and extract profits from the same market you are trading in. Ask yourself, can you compete with them?
If yes, then why do you feel you have a better chance to win consistently?
4. Know When to Trade
Many traders may have a question like, what is the best time for day trading? The best times for day trading are usually during the first and the last regular market trading hours. In these hours, the market tends to produce most of its price movements.
The first and last trading hours are the most volatile in a trading day. But this is often referred to as the power hour stocks by the pro day traders.
5. Decide What to Trade
Decide what you are willing to trade when the market is open, and do it wisely. Stockbrokers have different areas of expertise, so find out the best fit.
If you can’t decide for yourself, then talk to other day traders and get a few recommendations from them. You can also check for online reviews, participate in online discussions, or ask your colleague for the same. If you believe you can’t do well by yourself, look for a good broker who deals in the area you want to trade-in.
6. Develop a Strategy
A supreme step is to develop a solid strategy for your trading. Find multiple online courses and references which can help you to understand the process of day trading. You can learn the various techniques along with the risks involved for the same.
After studying from there, start analyzing the actual trends and strategies, for which you need to understand charts and patterns.
7. Understand Trading Charts and Patterns
Day trading strategies usually depend on two types of stock analysis, fundamental and technical analysis. To find a potential day trading opportunity, you must focus on the chart based technical analysis.
You can easily do so by using various technical analysis software and tools available in the market. Also, look for experts who can guide you through the process. Experts can walk you through numerous day trading strategies. Try to understand the psychology of trading charts.
If you notice that a particular stock is generating the same type of pattern over time, then there’s a great chance that it will continue to follow the same trend. Studying the historical data and concluding the best day trading strategy is what a pro trader uses daily.
Day trading demands intense focus. Once you master the prime points of day trading, then there’s no doubt that you can attain financial independence faster than others. So, what’s your day trading strategy? Do share with us.