The Covid pandemic has seen a huge surge in day trading, as individuals look for new ways to make money from the confines of their own homes. But not everyone is cut out to be a stock market millionaire. The likelihood is that most new day traders will end up in the red.
If you’re considering day trading then there is a lot to learn about investing in stocks. Let’s take a look at 6 fundamental day trading tips for beginners to help you get started and keep you in profit.
- Trade With Money You Can Afford to Lose
Of all the day trading strategies, this should always be your number one. The stock market can be incredibly volatile. While this can work to your advantage it can also result in your investments losing their value rapidly.
When you’re starting it’s important to put a small amount of money aside for day trading. It should be an amount that you can afford to lose. As exciting as the promise of making thousands of dollars in a day might be, don’t expect it from the very beginning.
- Be Patient
Just because you’re a day trader doesn’t mean you need to trade every day. It’s important to learn to wait for opportunities. If you don’t see the opportunity then don’t trade.
- Be Disciplined
Impulsive behavior can be your worst enemy when it comes to day trading. You need to approach your trades with a plan and stick to it.
Greed and fear are two common emotions in trading. They can cause you to stay in trades too long or exit them too quickly.
- Set Targets
Decide in advance how much profit you want to make from a trade. You also need to decide how much you’re willing to lose if a trade starts going south. Sticking to these targets will help keep emotions at bay.
When you’re looking for stocks to buy don’t just look at someone else’s top 10 list. Make sure you’ve done your own research too. It’s your money that you’re investing so take some time to research into each potential stock.
When you’re looking to get started with day trading the choices and recommendations can be overwhelming so put some time aside to research the market first.
- Use Stop Loss
Stop-loss is a day trader’s safety net. Should a trade start going badly, having a stop loss in place can save you from a lot of trouble.
A stop-loss sets an exit point to help you minimize your losses. Let’s say you’re investing in penny stocks and buy a bunch of stocks at one dollar. If you’re only prepared to risk a 20% loss then you would set your stop loss at 80 cents.
Don’t Forget These Day Trading Tips
Even as you progress as a day trader, these 6 day trading tips are the fundamentals that the most successful day traders use throughout their entire careers.
There are huge rewards to be reaped from day trading, but there can also be as many losses. Never go into a trade that you can’t afford to lose and always stick to your plan.
If you’re looking for more tips on how to make money online then be sure to take a look at our other articles.