Are you new to day trading and thinking about ways to become a successful day trader? If the answer is yes, then you are here at the right place.
If you don’t know anything about day trading but want to try out your luck as a day trader, you should know that day trading includes the buying and selling of financial securities on the same day. Day traders aim at capitalizing on short-term changes in the prices of financial securities.
In other words, day traders seek to take advantage of the smallest price moves that can turn into huge profits – if you know how to trade strategically. The best thing about day trading is that it is an ideal investment platform for those without prior trading experience.
If you want to know how to make money day trading, we have a list of essential tips that can help you become a successful day trader – even – if you have no prior trading experience.
The first thing that you will want to do as a day trader is to gain knowledge. You might have heard it before – knowledge is power – and the same rule applies to day trading. As a day trader, you will want to keep yourself updated about the latest stock market news, updates, and trading trends.
You will also want to keep track of all potential events that could affect the stocks.
So, to become a successful day trader, you will want to do your homework and prepare a list of the financial securities you would like to trade. You will also want to look into reliable news outlets to stay updated on the latest stock market developments.
Know the Risks
Similar to any trading platform, there are potential risks linked with day trading. So, you will want to set aside some funds that you are willing to risk for each trade. The essential benefit of day trading is that there are fewer risks linked with it, and the chance of getting profits is usually higher.
This aspect also makes day trading an attractive source of making money.
Dedicate Time & Effort
Many potential day traders start day trading as a side hustle. However, here is the thing – if you want to become a successful day trader, you will want to understand and accept that it will take your time, serious dedication, and effort to become successful in this trading business.
In other words, day trading requires time and attention, so you will more likely need to bid farewell to your 9 to 5. Day trading will take most of your time – in fact – most of your day.
So, as a day trader, you cannot take day trading as a side hustle, as you will be closing your trade by the end of each day. As a day trader, you will have to track the stock markets and spot opportunities that can appear at any time during trading hours.
That said, you will want to set aside time to spot trading opportunities throughout the day.
As a day trader, you will want to start small – especially – when you are in the beginner phase. Initially, you will want to have the learner mindset and focus on no more than two stocks for one session. Focusing on one or two stocks initially makes you find and track trading options easier.
You might want to start the trading game by trading fractional shares, which allow you to invest smaller dollar amounts. So, as a beginner day trader, you will want to start wisely by starting small by trading fractional shares.
Nonetheless, you will want to carefully assess the funds you initially set aside for each trade. If you study successful day traders, you will see that they typically aren’t willing to risk more than 1 to 2 percent on their accounts per trade.
Suppose you have $40,000 in your trading account and decide to place a 0.5% risk on each trade; your maximum potential loss will be $200. So, you will want to commit to smaller amounts and assess the funds, so you are prepared to lose an amount.
Don’t Lose Your Cool
As a day trader, you will want to keep your cool and have a realistic viewpoint about the profits. There will be times when the stock market will be testing your nerves – it will be your responsibility to keep certain emotions, such as hope, fear, and greed, at arm’s length.
You will also want to be realistic about your profits – many successful day traders only cash in profits on 50% of their trades.
But on the brighter side, day traders make more wins than losses. Once you have developed a bunch of predictable and reliable trading strategies, you will want to stick to the plans rather than trying to chase potential trading profits.