Trading Tips for Beginners
Day trading or day trading options for those of you who do not know, is the act of buying or selling your stocks on the same day. Heck, you can even trade multiple times of the day if you want and it can really be a lucrative business, provided that you do the things necessary for you to earn some profit.
That being said, day trading is an active way of trading and it involves looking at the stock market closely so that you can make suitable trades that will earn you some bucks, albeit not so much compared to when you wait for a really big trade.
So, if you’re looking to employ this strategy, here are some tips that are greatly beneficial for beginners:
1. Keep Yourself Updated
The hallmark of being a good day trader is that you have to be “in the know”. Look at the stock market closely for any trades that you can make that will help you earn money. It is best that you do your own homework and look at the general economy, the interest rates, and other factors that could affect the prices of the shares you’re holding/trading.
2. Save Some Time and Money on the Side
involves you to buy or sell some shares on the same day. That means that you have to safeguard your assets by putting a “risk limit” or the amount of money you’re willing to risk in every trade.
For instance, if you have about $40,000 in your trading account and you’re willing to risk 0.5% of it, then the actual risk per trade would be just $200. Doing this will hedge you from losing so much money.
Other than budgeting some money, you also have to set aside a lot of time as well. Since day trading is a form of active trading in and of itself, you’ve got to spend a whole lot of time to it. In fact, seasoned day traders work a full-time job- from the time the stock market opens until its closing time at 4 PM.
If you’re committed to getting rich, you have to set both time and money aside for this endeavor.
3. Don’t Invest Too Big or All at One Time
You can potentially lose your assets in the stock market, especially if you’re not careful. This advice is especially true for beginners. Since you’re still new, I advise you to do only a maximum of two trades per day. This is so that you will know the feeling of day trading.
Once, you’re comfortable in doing 2 trades per day, you can up that to 3, then 4, and so on. Only do this if you’ve gained enough experience.
4. Keep Calm and Stay Cool
Day trading can be stressful and in the event that you lose your cool will also be the time that you’re going to lose your trades.
Keep calm and collected and have a plan ready. If your emotions start getting in control, just fall back to the plan you’ve set and stick with it.
5. Be Realistic
The problem with some day traders is that they expect to get rich in a short amount of time. They expect to win trades 100% of the time, but this is just something that is not at all achievable, especially for a beginner.
Be realistic about the profits that you’re going to get. By doing so, you do not make stupid trades, thus, losing a lot more in the process.