Day trading is a common and popular active trading strategy that entails opening and closing trades before the end of the day. For beginners, the ability to hold trades for a short period and still generate a substantial amount of profit can be challenging. However, that does not mean that it is impossible.
Below are some of the tips to steer any beginner in the capital markets while deploying the fast-paced day trading strategy.
Have A Plan And Risk Management Strategy
A plan of action is an important aspect when it comes to day trading. As a beginner, avoid the risk of putting real money on the line without a real plan. The plan, in this case, should include how much you wish to buy and sell when to enter and exit trades as well as trading volume.
The plan should also come with a risk management strategy that ensures you only lose what you can afford. Without a trading plan as well as risk management strategy, you are sure to have a short time as a day trader
When To Day Trade
Day trading is all about consistency. One way to achieve consistency is by trading the same hours each day. It is quite common to find day traders trading three to four hours a day. When it comes to day trading stocks, as a beginner, you will have to pay a close watch on the first two hours after the market opens. This is when you are likely to find the best trades.
When it comes to trading currency pairs, it would be wise to trade between 1200 and 1500 GMT as this is the time when the forex market experiences the biggest price moves.
Use of Technology
Harnessing all the available technology is a sure way of gaining an edge as a day trader. In addition to using a computer or laptop as well as a reliable internet connection as a beginner, you must master the art of using charting platforms to analyze the market.
The use of mobile apps can also come into play to ensure you have instant access to the market almost anywhere.
Never Stop Learning
To be a successful day trader you need to always be on the know, of all the new trends in the markets Staying up to date with the latest news as well as learning new day trading strategies, as well as price patterns, is a sure way of building a career as a day trader.
The biggest mistake that beginners do is overtrading. As a day trader, you need to know when to stop trading as a way of preventing the accumulation of losses. If a given strategy is not working, take a pause and go back to the drawing board.