Day trading is the act of buying & selling a financial instrument within the same day or even multiple times over the course of a day. Taking advantage of small price moves can be a lucrative game, if it is played correctly. But it can be a dangerous game for newbies or anyone who doesn't adhere to a well-thought-out strategy.
Day Trading Strategies or Techniques to Master before you make can consistent Profits :
1. Gain Knowledge -In day trading proper knowledge is must without that u will loose everything. So do your homework. Make a wish list of stocks you'd like to trade and keep yourself informed about the selected companies and general markets. Scan business news and visit reliable financial websites.
2. Trade with Surplus Funds only -Assess how much capital you're willing to risk on each trade. Many successful day traders risk less than 1% to 2% of their account per trade. Set aside a surplus amount of funds you can trade with and you're prepared to lose. Remember, it may or may not happen. As many borrow capital from bank or from someone so if they loose they might not be in the position to repay it.
3. Keep yourself Available during Market Hours - Day trading requires your time. That's why it's called day trading. You'll need to give up most of your day, in fact. Don’t consider it if you have limited time to spare. The process requires a trader to track the markets & spot opportunities, which can arise at any time during trading hours. Moving quickly is key.
4. Start Small - As a beginner you need to start small. Don’t do harsh trading as you are not much knowledgeable and experienced.
5. Avoid Penny Stocks - You're probably looking for deals & low prices but stay away from penny stocks. As it won’t give you a profit & keep wasting your time so do trade only in blue chip stocks which is fundamentally strong and gives you profit.
6. Time Those Trades - Many orders placed by investors & traders begin to be execute as soon as the markets open in the morning, which contributes to price volatility. The middle hours are usually less volatile & then movement begins to pick up again toward the closing bell. Though the rush hours offer opportunities, it’s safer for beginners to avoid them at first.
7. Cut Losses With Limit Orders - It means don’t place a long target keep tracking the position & take a minimum profit otherwise if market reverse it will give you loss only instead of getting a minimum profit. “It’s always better to have something then nothing”
8. Avoid Greed - If you a make you day with your targeted profit then don’t go for another one else you wouldn’t have that profit as well which u have made earlier. Avoid multiple trades of different scripts or multiple lots in single trade these will only give you loss as these strategies not have more then 1% surety of giving you a profit.
9. Keep Patience & be Disciplined - You have to be patient & disciplined while trading. As impatient nature will not give you a profit.
10. Stick to the Plan - Successful traders have to move fast, but they don't have to think fast. Why? Because they've developed a trading strategy in advance, along with the discipline to stick to that strategy. It is important to follow your formula closely rather than try to chase profits. Don't let your emotions get the best of you & abandon your strategy. There's a mantra among day traders: "Plan your trade & trade your Plan."
11. Learn from the Mistakes - You always have to learn from the mistake. Keep records of your all trades & evaluate them after market hours and see where you made a mistake and learn from them and make sure you never repeat that again.
Few thing which needs to be learnt:
- Do trade according your capital only
- Use a proper Stop-loss
- Do your own research before market opens.
- Also check the situation of global market so that you can predict
- Do not trade immediately when market starts, observe markets for sometimes then start trading according to the market conditions.
- Do trade according to your loss bearing capacity
- Be Patient & disciplined
- Never Repeat Your Mistakes
- Don’t do emotional trading
- Do read books about investments
These are some points which have learnt through trading. Every person have their own experience & capacity of learning. Stock market is like a big ocean you as much as you will started knowing this you will go deeper & deeper. Still you will not going to 100% from it. Try your best to learn as much as you can. This consistency of learning will help you to get the more profit by doing day trading.
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