Day trading is a Riskiness game, especially for newbies or those who have no idea about strategies. You need to do a lot of research and put in a lot of focus into it. Treat it as a job and keep your emotions out of it. You can find lot of day trading tips if you follow AvaTrade France Facebook page. Nevertheless, here are a few more things you should consider, before plunging into day trading:
Do your research
Keeping up on the latest news about stock market is very important if you want to try day trading. Get information about the interest rate plans of the Fed, economic outlook, and various other events that can affect stocks. Maintain a wish list of all the stocks that you would like to trade in and do your homework on these companies.
Determine how much you are ready to risk
Before entering into any trade, it is important to find out how much you can risk on it. Ideally, you should be risking not more than 1 or 2 percent of your account, on each trade. For instance, if you have a trading account of $40,000, you can easily risk about $200 on a trade (0.5 percent of your capital). Make sure you set aside any surplus funds you may have so that you can prepare for losses.
Put in some extra time and efforts
Day trading is not something that you can take easily. You will have to spare a lot of your time. Apart from entering transactions, you will also need to monitor the market and discover opportunities to book profit.
Avoid Penny Stocks
There are many stocks that provide very bleak chances of hitting a jackpot. It is important that you stay away from such illiquid penny stocks. If their prices fall down below $5, they can get de-listed from the major stock exchanges.
Time your trades accurately
Most stock orders are executed as soon as the market opens. If you are a seasoned player you will recognize these patterns and spot opportunities to book profits. However, if you are a newbie, you will have to spend some time reading the market before you start making any moves. Wait for about 20 minutes or so, before you take any decision.
Use limit orders to minimize losses
There are many online trading platforms that allow you to enter and exit trades. You can set the price at which you want to buy and sell the stock. This gives you guarantee on the price. You can also put stop losses on each of your trades to reduce your losses.
Don’t get too greedy
You can’t win all trades, even if you try. In fact it is only about 50 to 60 percent of your trades that you can actually book profits on. Therefore your focus has to make more on winning stock so that they compensate your losses. Be clear on your enter and exit strategies and limit each trade to a certain percentage of your account.
Monitoring your trades becomes easier if you reduce the number of stocks you focus on, during each session. Always start small and stay as cool as possible. Use your logic and not your emotion while making any decision regarding your transactions.