Day trading is incredibly difficult for first timers. The extent of focus you can give as well as the time you can devote are deciding factors of whether you will gain or lose. Although day trading is challenging, you’ll see yourself getting a large amount of money once you get a hand of it. But you better prepare yourself for the risk involved. To minimize the risk in day trading, particularly for beginners, here are the top 7 tips you need to know to be successful in day trading.
1. Research! Research Reseaaaaarch!!!
Always remember that knowledge is power. Before delving inside the abyss of trading, always ready yourself with knowledge. Whether trading in stocks or cryptocurrency, you need to keep updated of the news that will decide their prices. There are deciding factors that you need to learn such as the management of the company, the products they are dealing with and the different crucial ratios. You also need to read trading books to expand your knowledge. With that, you can possibly grasp what the market will look like.
2. Make a plan.
Do not go to a battle without plan, you will surely be defeated if you do so. Day trading without a plan is also the same as telling the market to swallow up your money. Always have a plan. Try to draw out how you will dive into the market for the day. Knowing your limits and strategies is part of this. Also, keep having Plan B as a back-up plan in case Plan A doesn't work.
3. Time is important.
Day trading is not something you buy in the morning then trade it in the afternoon. The reason why it is called day trading is you mostly use the day to trade. You need to set aside your time for trading. You never know when will opportunity come so, you need to closely monitor the charts and news as much as possible to spot those winning moments.
4. Control Your Emotions!!!
There will be times when the market tests your dreams and hopes. Do not give in to those temptations. You need to have self-control. Instead of emotions, trading should be governed by logic.
5. Have entry and exit rule.
Know your trading parameters and always stick to them. Your “what ifs” can sometimes lead to your doom. Discipline here is the key, so stick to the plan as much as possible. With that, you can minimize your losses.
6. Better start with small
As a beginner, it is very important to learn the basics first. Investing with large amount of money and giving all in are not a good strategy. Start with trading low risk stocks and if possible, do not diversify yet. Try to monitor at least two stocks to find out whether trading is really right for you, as many people I know started with day trading but ended up with just investing for a long term goal. It is advisable to buy more stocks from different companies only when you get comfortable with trading.
7. Learn from your mistakes.
To do this, have a trading journal. You need to record your observations as well as your experiences while trading. With that, you can pinpoint your mistakes. Doing this will allow you to make changes on your strategies and make better decisions.
REMEMBER, invest only what you can afford to lose. Happy trading and stay safe guys.
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