What is day trading?
Day trading is the buying and selling of stocks during the trading day by punters on their own account. The aim is to make a profit on the day and have no open positions at the close of the trading session. Day trading became a fad during the 1990s boom as people gave up their regular jobs to play the market full-time. The bursting of the hi-tech bubble was a rude awakening.”
If it is risky, why are people still Day Trading
Believe it or not, there is money to be made. The catch is that you need to research and do some homework before jumping on the wagon. It is like trying to cycle without your training wheels. The professionals out there follow some very basic rules.
1. No greed
2. Within limit
They follow the above and stay focused. Like anything in life, by following the simple rules above, anyone can trade.
Trading occurs in 3 ways:
You must buy when the market is going up
You must buy when the market is going down
This means market is about to change directions
Another reason people are day trading is because there is now softwares available for you without going through a broker. At your own convenience, you are now able to trade with a simple internet connection and the software installed on your computer.
Love of the markets
If you have a love for the markets, then it will show in your trading. The last thing you want to do is trade because so and so is trading and has made a killing! They have a love of the markets and know what they are doing.
Time to monitor the stock market on a daily basis
People who day trade want to complete the trade on that day itself. Therefore, it is important to monitor the stock market on a daily basis for the current trends.
Knowing when to exit trades
It is human nature to be greedy. However, any successful trader will tell you that when it is time to exit a trade, LEAVE. It is better to cut your losses then to be completely cut!
Money Management Skill
Someone who can do that will be successful with trading because they know every penny counts!
This will minimise erratic trading and huge losses in the long term.
Do not be erratic, have a system
“I got so carried away, I lost focus”. A successful trader stays in focus and is aware that there will be ups and downs. Just because a particular week of trading has been a windfall, there should still be a system in place as to how much you will trade and when you will exit a trade.
Learn, learn more and continue to learn
A successful trader will continue to learn and improve themselves. They will read up on the latest trends, what to trade , what to avoid and have an “open-minded” attitude.
Do not repeat the same mistake
How many times have you received a parking fine in the same spot? Yet still do it? It is the same with trading. Mistakes can and will be made even by the most experienced trader. However, mistakes in the trading world can be costly. Therefore, if you are bitten once then ensure you do not get bitten again. It is a waste for your hard earned money to disappear in this way
Set a loss limit
Before you start trading, you must have this strategy put firmly in place. It will deter you from taking on extra risk and will give you peace of mind that you are allowing only a certain percentage of your investment to go for a loss.
Like anything you do, practise makes perfect. With trading it is the same as well. Know what you are getting into and then make sure you do your homework before you plunge into the exciting world of trading.
This website has some interesting articles about Day Trading as well as some videos. Take your time to have a look at them.