What is Day Trading?
Day trading or Intraday trading is an act of buying and selling a financial instrument within a day or even multiple times on the same day. Day traders intend to take advantage of small price moves. It is one of the most lucrative and hyped ways of trading. This is why most traders start in the market with unrealistic expectations and big profit targets.
Day trading can be lucrative when executed correctly. But it is a dangerous path for those who don’t follow a well-thought-out strategy. In contrast to what is being promoted by “influencers” these days. Day trading is not an easy job. A trader should be Focused, and diligent and Should be able to keep emotions out of it.
Lack of control over emotions is one of the most common reasons why most day traders end up losing money in the market. It is important to use proper trading techniques with Trust and proper trading psychology in order to succeed in the market.
Day Trading Strategies
1. Respecting the Trend
One of the most basic and common mistakes that make the life of a beginner miserable is not knowing the direction of the trend. A day trader should always look to take a trade in the direction of the trend, rather than going against it. Catching the reversals is also an important part of a day trader’s game. But a trader should only go against the trend when there are multiple signals indicating and confirming a potential reversal. It is one of the most underrated but effective Strategies.
2. Manage your Funds
NEVER jump into the market with all of your capital. It is one of the most common errors committed among new traders. Assess how much capital you are willing to risk in each trade. In conclusion trade with that amount of money which you are willing to lose. This strategy will help you preserve your precious capital
3. Time Those Trades
The first 15 minutes of the markets are highly volatile. Seasoned traders may be able to make appropriate decisions during this period. But new traders should just read the market and avoid placing orders during this period. The middle hours are usually less volatile. and then movement begins to pick up again toward the closing bell. It is during this time that new traders can look to grab opportunities.
4. Cut Losses With Limit Orders
Many new traders use market orders instead of limit orders which can at times be the sole reason behind a failure of what could be otherwise a good trade. A market order is executed at the current price of an asset, Whereas a limit order ensures the price but not execution. This means that the order will execute only if the desired price is available. This strategy is very important for Traders intending to catch small price movements.
5. Control your Emotions
Markets will test your nerves every second and every minute. As a day trader, you should believe in the strategy and be able to keep fear, greed, and hope away from you. And always keep in mind that you should never make a decision in FOMO.
6. Believe in your plan
It is important to believe in the formulae, process and strategy that you have created after intensive research and experience. rather than chasing profits, A day trader should stick to the plan. and Ensure that plan is executed to the best of his or her potential.
7. Trade the News
Day Traders using this strategy will buy when good news is announced or short sell when there’s bad news. This can lead to greater volatility, which can lead to higher profits or losses. Having the knowledge of the news is necessary not just because it helps identify opportunities. But also helps avoid taking a trade against the news. which can lead to heavy losses.