If you are interested in day trading you first need to know what it is all about and to understand the basics of day trading. As a career, day trading attracts individuals from many walks of life.
Important: The principles presented in this article mainly applies to day trading. But these info can also be used for stock trading, currency trading and futures trading.
What is Day Trading?
Day trading generally stands for the system of selling and buying financial tools such as bonds or stocks throughout the day. Many day traders sell their positions before the market close of the trading day to avoid the risk of price gaps (differences between the previous day’s close and the next day’s open price) at the open.
But don’t be fooled by all the glory of day trading. Day trading is extremely risky and can result in substantial financial losses in a very short period of time. Estimates are that 80% to 90% of all those who begin day trading today will lose their trading capital within the next 12 months.
It is necessary to plan your trading business and prepare a proper strategy for achieving success at day trading. Day trading is like running any other kind of business.
Here are some tips that will help you to succeed with day trading:
It is a good idea to record all of your day trading results.
Get a mentor. Is there any serious profession that you can learn without a mentor?
Before jumping into day trading, remember to do your homework first.
Learn from your losses – take advantage of each loss to improve your knowledge of the market.
Be picky when selecting your trades. Remember, the important point is how much you earn in a month and not on how many times you execute orders.
Characteristics of Successful Traders
If you want to succeed with day trading, then you should do exactly what the professional traders do:
Novice traders spend all their time working on entries, while seasoned traders know that the really difficult decisions in trading involve exiting profitable positions.
Most successful day traders have a true love or passion about their day trading activities.
Practice paper trading until you become completely comfortable with the day trading system and confident in your ability to use such techniques as “buy/sell orders” and “stops”.
Successful traders have one to three things that work and they use them over and over and over and over again for as long as they are profitable.
Successful traders identify what type of trader they are and do not try to trade a methodology that does not fit their personality.
Matching a method of day trading with your personality is the only way you will ever feel comfortable in the markets. Go with the flow Be conservative, and do not let the position take control of your account. Do not expect to become an expert day trader overnight.