Day Trading Tips for Beginners

Day Trading Tips for Beginners

Day trading involves buying and selling securities in short periods, rather than for years. When the price drops, you buy an asset and sell it when it rises. To make money day trading, you need skill. Day trading beginners have much to learn. You'll need to decide what to trade, how much capital to invest when to trade, and how to manage risk.

Beginner Day Trading

Day traders don't care if the overall market rises or falls as you can make money as long as the stock market fluctuates. Very active day traders will buy and sell securities throughout the day. Others make one trade a day. What you do depends on the day's prices and your trading strategy. Most day traders use price charts to decide when to trade via a brokerage account.

Day trading can be emotional if you think you'll lose money so best not to start day trading without caution. It's not easy money you won't need years of preparation but will need to spend three to six months practicing and working on your strategy.

You'll need to educate yourself on the following:

• The inner workings of trading
• When to purchase and when to sell
• Day trading tactics that are commonly used
• How to read and interpret a price chart as well as identify patterns
• How to cut down on the amount of money you lose in a trade

After you've had a few months worth of practice with a demo trading account and reached a point where you're comfortable with your trading strategy, you'll be ready to start trading with actual money.

Day traders make how much?

Day trading won't make you rich quickly, but it can be profitable if done right. How much a day trader can make depends on many factors, including:

• 1. Your trading experience
• 2. How well you can limit your losses and how disciplined your trading strategy is.
• 3. The sum of money with which you begin your trading career.

Private day traders trading their own money are different from a bank or hedge fund traders. In February 2022, the average day trader's salary was $80,081, though many received bonuses or commissions as they are salaried by a private company.

Day Trading Essentials

After deciding what to trade, you'll need some basic tools.

PC/laptop

Two monitors are preferred, but not necessary. When you run your trading program, the computer should not lag or crash. You don't need a high-end computer, but don't skimp. Make sure your computer's software is up-to-date. Slow computers can be costly when day trading, especially if they crash or get you stuck in trades.

Fast, reliable Internet

Unreliable internet prevents day trading success, you also should use a cable or ADSL connection as having multiple web pages and applications open may slow down your trading platform. If your internet is often down, a more reliable provider or faster connection may be worth the extra cost.

Day Trading Platform

Try out trading platforms by using their demo accounts. You may change your trading platform or how it's set up multiple times during your career. Futures and stock traders use a platform like TD365 for day trading.

Day-trader Tips

After you know what you'll trade and have your tools, practice, plan, and develop a trading strategy. Here are some tips to help you start day trading and manage risk.

Start with Small Amounts

Start day trading with money you can afford to lose. Depending on your trading style, you may start with $500 or $1000. You shouldn't risk losing the money you need for basic living expenses when you first start day trading. Losing the money you can't afford can be stressful and lead to bad decisions. By starting small, you limit your losses and reduce the likelihood of trading unwisely.

Use Limit-orders

A limit order sets a buy or sell price. A buy limit order is executed at the limit price or lower (so you don't overpay). So you don't lose too much, a limit order to sell will be executed at or above the limit price. Your brokerage places the order, and the trade is automatically executed when the stock reaches your price. This reduces losses.

Don't Overreact

Day trading can make you emotional and lead to rash decisions. This leads to bad decisions. When buying or selling, follow your strategy. Logic is better than emotion in day trading.

Trading Times

Day trading doesn't require all-day trading. Only trade two to three hours a day for more consistency. 8 What you trade will determine your trading hours.

Stocks are best for day trading one to two hours after the open and an hour before the close. 9:30 a.m. to 11:30 a.m. EST is the most volatile time of the day, with the most profit potential. Some big moves happen from 3 to 4 p.m. Trade the morning session if you only have an hour or two.

Futures day trading is best around open. Futures trade around the clock, so day trading opportunities start earlier than in stocks. 8:30-11 a.m. EST is prime trading time. Futures markets close at different times, but the last hour of trading offers big moves.

On weekdays, the forex market is open 24 hours. Most day traders use EUR/USD. This currency pair trades more between 1 a.m. and noon EST when London is open. 7 to 10 a.m. EST sees the most price movement because both London and New York are open.

Strategize your Day Trading

Use a demo account to practice trading in any market. Even when the market is closed, you can practice all day. No two market days are alike, so it takes practice to see trade setups and execute them without hesitation. Practice for at least three months before switching to live to trade.

When switching from demo to live to trade, most traders' performance declines. Demo trading lets you test your strategy but It can't replicate the real market as It doesn't cause emotional turmoil like real money trading does.

If your trading goes poorly when you go live (compared to the demo), this is normal. You'll improve if you stick to your strategy and avoid trading emotionally.

Avoid Penny Stocks

Beginner day traders should look for deals and low-priced penny stocks may look appealing. They're hard to trade quickly and risky, so they're not good for day trading. If their price drops too low, they may be delisted. Avoid these stocks unless you're an experienced day trader.

Day-trading Strategies

When buying an asset, consider three factors.

• 1. Liquidity lets you buy and sell stocks quickly and profitably. More liquidity means more profit-making opportunities.
• 2. Volatility is an asset's daily price fluctuation. Volatility increases profit and risk.
• The number of daily trades of an asset indicates its demand. Higher volume indicates more interest in an asset.

3. Successful day trading also involves knowing when to exit a position to make a profit. You should consider multiple asset-selling strategies to find the best one.

News - Positive or negative news about a country or stock can cause market volatility and high profits and losses. This strategy involves short-selling bad news and buying good news. With experience, you may be able to predict global and economic announcements and sell before bad news.

Scalping uses small bid-ask price gaps. To do this, enter and exit a position quickly, usually within minutes or seconds.

Contrarian investing assumes a rising price will fall. When prices fall, you buy and sell.

Following trends - If trends will continue, follow them. If you think a price will continue to rise, you'll buy as it rises and sell as it falls.

Try these strategies in your demo platform. Your trading style and risk tolerance will determine which is best. Many day traders use a combination of these strategies, depending on market behavior and asset type.

Risk Management

You need to decide how much you are willing to risk on each trade. is recommended to only risk 1% of your capital per trade. This is accomplished by picking an entry point and then setting a stop-loss, which will get you out of the trade if it starts going too much against you.

Learn how to calculate the proper position size for stocks, forex, or futures to reduce risk. No single trade should expose you to more than 1% capital loss, considering position size, entry price, and stop-loss price.

You don't want one trade to ruin your account (hence the 1% rule), and you don't want one day to ruin your week or month. Limit daily losses, 3% of capital is one option. If you risk 1% or less per trade, you'd need to lose three (with no winners) to lose 3%. A good strategy should prevent that. Stop trading once you reach your daily limit.

Set your daily loss limit to your average winning day once you're profitable and become more experienced. If you make $1000 per day, you can afford to lose $1000 on a bad day, stop trading if you lose more as we want small daily losses so they can be easily recouped by a single winning day. Obviously, we should have a majority of winning days to be successful.

Conclusion

Day trading may be too risky for new investors and stock market beginners. First, it's advised to invest in mutual funds, stocks, or ETFs to build a long-term portfolio (ETFs) doing this you will learn and gain trading and investing confidence.

Irish Trader and YouTuber.