Day Trading – Want to get started with day trading?
If yes, you need first to learn as much as you can about day trading. Rather than stepping into the world of day trading due to the whim or due to greed, it is a good idea to learn as much as you can about day trading before you begin trading.
Today, we will cover the basics of day trading to help you understand what exactly it constitutes and how you can get ready for day trading.
What Exactly Is Day Trading?
Day trading is the trade that you close within the same trading day. It means that it would not carry forward to the next date. The best thing about day trading is that since your broker and other financial institutions can provide you with leverage for trading, the total capital that you need is on the lower side. It also helps you in generating a significant amount of return on your money invested.
Many traders trade for a living. However, compulsive day trading is not the way to go. Instead, you can adopt any of the day trading strategies like:
- Mirror trading
- Trend trading
- News trading
- Contrarian trading
We would cover all of the strategies in a different article. However, if you want to step into the world of day trading, it is essential to master or mimic at least one of them. (You can simulate the strategies by referring to the resources on our platform.)
One thing which you need to keep in mind is that any of these strategies can work. There is no perfect strategy to choose from. Traders are using different approaches and still making money.
However, it would be best if you remember that day trading requires you to be disciplined and also requires you to gain some knowledge. That brings us to the fundamental question of how to get ready for day trading?
We’ll cover that below.
How to Get Ready For Day Trading?
If the same question is puzzling you, we will share with you a step-by-step guide to help you learn to prepare yourself for day trading.
1) Day Trading KNOWLEDGE:
Irrespective of the strategy that you need to follow, you need to be aware of the basics. These include:
Technical analysis: Technical analysis refers to chart trading. Only when you can read the charts, you can decipher them and execute the trade as well. Technical analysis involves knowledge of patterns like head and shoulder, double top, triple top, and so on. Detecting these patterns in real-time takes a lot of experience and practice.
Trading psychology: When you’re trading any asset class, fear and greed need to be kept at bay. Only when you develop proper trading psychology which relies on probabilities and trading strategy, you can trade successfully. If you let fear and greed cloud your vision and judgment, you won’t be able to make money. That is why; you need to educate yourself in trading psychology.
Risk management: It is always essential to have a target and a stop loss when you’re day trading. The TARGET is the level at which the trade will close automatically in a profit. Stop loss is to minimize your losses in case the trade goes against you. Keeping these ensures that you can capture the profits automatically and minimize your losses in the same fashion.
Risk management principles to trade should be such that you do not lose more than 5% of your entire capital if the trade goes against you. It will ensure that even if you have a few losing trades, you can bounce back in a timely fashion. You need to familiarize yourself with the risk management principles and then start trading.
These are the three aspects on which you need to gain knowledge before starting your day trading career.
2) The Right DAY TRADING STRATEGY
Do you have a strategy in mind?
Most traders do not pay attention to strategy. However, it is one of the most important aspects of day trading. Developing a strategy is pretty tricky. It can take years to build one and even longer know all the loopholes.
You might be thinking, what’s the solution then?
Mirror trading is your best bet. Platforms like ours help you keep a watch on other traders. You can go through their track records and mimic their trades if you find their success rate to be viable enough. Since there are thousands of traders on our platform trading across various asset classes, finding a suitable trader to follow is quite easy.
Our social platform also offers you predictive analytics as well as load proven layouts to follow. Point being, rather than creating your strategy, it is better to mimic a strategy. It will allow you to develop a successful plan right from day one. Once you have a strategy by your side, you can begin trading right away.
3) THE RIGHT DAY TRADING BROKER:
The trading partner or the broker whom you choose will have a detrimental impact on your success. While comparing the different brokers, you have to look out for things like:
- The brokerage should be on the lower side. You would be trading for profits of 1% to 2%. That is why; the brokerage needs to be pretty small.
- The broker should have a reliable track record.
- The broker should have multiple responsive support channels.
- The broker should offer you proper leverage.
- The online platform of the broker should not lag.
When you judge a broker based on these qualities, it will become easy to choose the right broker.
4) The Right TRADING PLATFORM:
You need to execute day trading trades within minutes. It means that you need to be familiar with the platform on which you are trading. Only when you’re familiar, you can execute the trades at a brisk pace.
The best way to get familiar with the platform is to practice with the DEMO. It will allow you to understand the navigation as well as the controls of the platform. Only when you’re well-versed with the trading platform, you can go ahead and start day trading.
Thus, if you have finally decided to step into the world of day trading, it is essential to follow our guide above and prepare yourself before you start trading with real money.
Doing so will ensure that your probability of success increases significantly. It will also help you in making a significant amount of return without necessarily risking all your capital.