Technology has made it incredibly easier to make money without having to leave the comfort of your home. With just a phone or computer and reliable internet, there is a wide range of income-earning activities for you to choose from. A fair share of these will require little to no experience or special skills.
If you guessed right, day-trading is one of these activities. On top of the things mentioned above, you’ll only need to have a few bucks to invest and set up a trading account to get started. But there’s more to day-trading than meets the eye. This is mostly because the possibility of making losses is also there if you go it ill-informed. With the right market information and strategy tips, however, you can regularly smile all the way to the bank to deposit massive gains from your trading activity.
Here are some tips experts will tell you when getting started with day-trading.
1. Have a Plan
Trading, just like any job, has its difficulties, and it is always best to make decisions when you are sober. When trading, you tend to have so much pressure that you may not seem to think straight. That is why you need to have a strategy, maintain discipline, and to stick to the plan. Your strategy is the game-changer as far as day trading is concerned. Know when you are going to trade, what you are going to buy and sell, and how much you will spend on your trades. Always plan your trade, and trade your plan.
2. Keep a Trading Journal
Like any business, you have to note down all your sales to know if you are on the right track. Trading is a learning process, and the best way to learn is to keep track of your moves and activity. Otherwise, how will you even know if you are progressing or regressing? You can have it electronically or manually, just how you like it! As pointed out by Jason from Trading Reviewers, trading journal software can provide you with the tracking and crucial reporting data. You will need this to advance your trading prowess and maximize your profits. It gives you insights into your overall performance, alongside data you can use to know your weaknesses. With these, you can make better trading decisions on your future trades. Among the things you can identify from your activity journal include:
- Trading history
- Trade volume,
- Entry and exit
3. Practice Consistency
If you do not have enough time to invest in it, getting into day trading might not be the best idea! It requires enough time for chart studying and trading, keeping track of the market so you can spot opportunities during trading hours. The more time you invest in this, the more accurate moves you will make when trade. Practice always makes perfect, but as a newbie day trader, you can use demos to trade, so you don’t end up losing your money. When you are consistent in your training, your baby steps will grow your prowess over time.
4. Start Small
Many people venture into day trading, thinking they will start making huge dollars from day one. But relax; Rome took years to be built! Instead of aiming too high on your first stocks, let two be your highest target in a session for starters. Fractional shares have become a popular option for many who invest on a tight budget or a specific amount. When starting, you have to find a regulated and reliable broker who will execute the trading on the market. Consider getting a broker with lower commission rates so you can minimize those costs.
5. Rely on Facts and Figures
It is also important to note that when day-trading, your knowledge is your power. It will assist you in making decisions based on what is there. Visit websites of financial companies and check out other sources for the latest news to know how the stock market is performing. Also, being up to date with events affecting stocks can give you an edge in day-trading. When you win a trade, do not let your emotions drive you to trade again. Always use the facts instead of letting your urge for more profit drive you. Do not put money in the forefront, because you can make mistakes and lose what you have already won.
6. Risk Management Is Crucial
One rule of the thumb in day trading is to ‘never lose what you can’t afford’. A risk management strategy allows you to avoid losses that you can’t come back from. It keeps you in business as a day trader.
7. Stop When You Need To
Also, remember that trading can be as addictive as gambling, so trade responsibly. As much as you need to stick to a plan, strategies that aren’t working after a few trials should be suspended. Don’t watch as your money goes down the drain just because you are being patient or ambitious.
8. Choose a Good trading Platform & Broker
A huge chunk of your success in day trading will also be determined by the trading platform you use, as well as the broker you choose. This is because if your trades are not executed quickly, and at affordable prices, you end up losing out on profits you would have made elsewhere.
When picking a trading platform you will want to ensure that it suits your needs and preferences.
Some questions you may need to ask yourself include:
- Are you using your phone or are you using your laptop?
- Does the platform have a user-friendly interface?
- Does the software provide trading insights, opportunity alerts, tips, and other resources?
On the other hand, the broker is basically your facilitator. They earn a commission from each of your trades. If their rates are too high, you could be losing a lot of money from your profits at the end of the day. To get the most out of your efforts, conduct thorough research when choosing a day trading broker.
On a parting shot, remember to stay vigilant and embrace technology. With the few tips above, you can put your best foot forward and profit more out of day trading. All the best as you take up on your new investment opportunity or a full-time job.