A day trader is an investor who is dealing with lots of opportunities and investments throughout the day. His main aim is to achieve the very best within the day. But at the end of the day, comes the night when these day traders need to calculate their wins. Now many traders may spend a productive day but with a negligible profit. And you might be one of those traders who are not earning as much as you are inputting. So, even after giving much effort and time, if you are a trader who is thinking of learning some methods to improve your day stock trading, then you are at the right place!
Today we have come up with some good tips to help you upgrade your trading strategy. But before that here are some of the common scenario that your trading result may look like.
- You may face some small loss which is the typical outcome when you are using stop-loss in your trade.
- Having small profits is also pretty common and mainly occurs when you are ending your trades on above-entry levels. In this case, the closing price is a bit higher than the opening price but not enough to create an impact.
- Your trades may result in big profits which are always expected. Big profits are often a surprise which surpasses your expectation and having such results take your trade to a higher level.
- The last and the least wanted result is a big loss which should be avoided at all costs. Trades ending with big loss are often not managed properly which can even lead to debt.
So, for a trader, his biggest concern is to avoid the big losses as much as he can. Having a small loss is fine because it can easily be overcome by other profits. Having smaller profits are also fine as it doesn’t cause you to lose some bucks. Instead of having a small profit, if you are looking for an uncertain trade, you might be risking both your investment and profit. If this risk becomes too big for you to take then you might be facing a big loss. That’s why smaller profits are better results than big losses. And in the end, something is always better than nothing. See here and create a demo account to measure your performance. Once you know the weakness by accessing the demo account, you will be able to act like smart UK traders.
So, our biggest priority should be to prevent the losses to go big. But how do we do that? Here are some ways for you.
Identify the losing traders
We have always said that you don’t need the experience to be a good trader. What you need here is a good market analysis. To be a good trader, you need to understand which one is a good trade and which one is not. This doesn’t take much to understand the losing trade. If a trade doesn’t fit your trading style, money management and investment then it is a bad trade for you. And, you should realize it too before you hop onto the trading train.
Know how much risk you can manage
Before entering a trade, calculating the risk amount is a must-do for all traders. You can only get to decide wisely once you have marked the risk limits you are willing to take for that trade. Trading risk should be managed in a way that it doesn’t go bigger than what you can manage to face. So, even if you lose the trade, your loss doesn’t drown you into debt. A risk to reward ratio is a useful method in case of determining the risk per trade.
When you are evaluating your trading results at the end of the day, take note of how much profit and loss you have gained on that particular day. Then calculate the amount of your profit and loss. In case you face small losses, try to overcome that loss and don’t let it turn bigger. If your small losses turn big then it may pose a threat to your investment. So, side by side, make sure to keep your small losses under control.