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16 Day trading Tips You Should Know
Day trading (also known as intraday trading or
short-term trading) is one of the most misunderstood trading techniques. The
rapid pace at which investment positions move within a single trading day gives
the impression that day trading is riskier or more volatile than other types of
trading. Let's put that to the test with an overview of some helpful strategic
trading tips for beginners and intermediate traders, and discuss how day
trading really works.
These day trading tips can help traders
of all experience levels create daily trading strategies for their portfolios.
Checklist
for day trading tips & tricks
Top 16 Day Trading Tips
With tons of tips and tricks out there,
what are the top 10 things you should know about?
1. Always have a plan
The most important of all day trading
tips. Don't risk real money until you have a plan of action. This means you
need to know what you are buying and selling, how much you are going to trade,
and when you are going to trade it. A trader without a plan is a pig headed for
an expensive slaughter.
2. Use current technologies
Since there are thousands of other traders out there, you need to use all the resources around you to stay one step ahead. Apart from that, charting platforms offer a variety of ways to analyse the markets. You can also compare your strategy to historical data to fill in any cracks. Mobile apps also ensure you have instant access to the market almost anywhere. Always try to learn advance trading methods like order flow analysis , order flow analysis help you to see what big players planning , you can read about order flow here.
3. Find cheap entry points
There are no “perfect entries and
exits”. Just stick to the entry and exit parameters in your plan. If you start
thinking, "Maybe I should see if this works," think again. Maintain
discipline and your bottom line will thank you.
Look for scenarios where supply and
demand are drastically imbalanced and use these as entry points. Financial
markets are like everything else in life: if supply is almost exhausted and
there are still willing buyers, prices will rise. If there is oversupply and
there are no willing buyers, the price will go down. Any good online trading
academy will teach students or participants how to identify these potential
turning points on a price chart by examining historical examples.
4. Don't focus on the money
This might sound counterintuitive, but
it makes perfect sense. With the money on your mind, you might do reckless
things like pocket tiny wins in fear of losing what you've already won, or jump
right in so you don't miss a move. Instead, focus on sticking to your strategy
and let your strategy focus on making money.
5. Set day trading price targets
All traders, regardless of their level of experience, should set day trading price targets before entering the market. When buying a long position, traders should decide in advance how much profit is acceptable and set a stop-loss level if the trade goes against them. Then it is imperative that you stick to your decisions.
This limits potential losses and
prevents traders from becoming overly greedy when the price rises to
unsustainable levels.
Exception!
In a strong market, it is acceptable to
set a new profit target and stop-loss level once the original target is met.
6. Insist on a good risk/reward ratio
One of the most important lessons in day trading for beginners is to understand the right risk to reward ratio. Beginners should adhere to the strict rule of only risking a maximum of 1 EUR or USD to potentially earn EUR 3 or USD 3 respectively, or a risk-reward ratio of at least 1:3 . As the instructors of every online trading academy point out, the correct use of stop-losses allows traders to manage risk.
7. Learn to be patient
Day trading requires patience, so be a
patient trader. Although it may seem paradoxical, successful day traders often don't
trade every day or all day. They may have a specific time that they believe is
the best time for them to trade daily. And during those hours you can be at
your computer and in the market. But if you don't see opportunities that match
your criteria, don't trade that day . This is far better than acting against
your own best judgment out of an impatient desire to just do something.
Negative balance protection protects
investors from losses that exceed the sums deposited in the custody account.
8. Be disciplined
Discipline is essential to achieve consistent trading results. Beginners need to set up a trading plan and stick to it. At good online trading academies, under the guidance of their instructors, students perform trading on real assets in the market to improve decision-making. Impulsive behavior can be a day trader's worst enemy. Greed can keep a trader in one position for too long and fear can cause them to exit too soon.
9. Take positions with conviction
Don't be afraid to hit the order button and execute trades. Newcomer day traders are often paralyzed by analysis. Because they keep themselves busy watching the trading chart candles and level 2 columns on their screen. This prevents them from acting quickly when the opportunity presents itself. For disciplined day traders who execute their plan, actual order placement should be automatic. If they're wrong, their stops will get them out without major damage.
10. Budget wisely
It is important that you sit down and develop a risk management strategy. This will ensure that you only lose what you can afford. Without such a strategy, your time as a day trader could be extremely short-lived
Do not trade daily with money that is needed to live on or set aside to achieve a goal. Experienced day traders have a small pot of short-term venture capital and a larger pot of investment capital that they save for retirement or some other long-term goal. The larger pot tends to be invested more conservatively and by means of positions with a longer holding period.
11 Measure credits invested per trade
Position size refers to how much
capital is allocated to a transaction on the stock exchange or other financial
market. A simple example would be if a trader wants to invest 100 euros or US
dollars:
He might buy 10 units of an asset
priced at 10 EUR or USD
However, this would exhaust the trading
budget
It is important never to risk too much
capital on a trade. The position size should be a percentage of the total day
trading budget, which can range from 2% to 10% depending on risk tolerance. If
the position size exceeds the predetermined percentage, it can result in
missing an even better opportunity in the market as all available funds are
tied up in one or two trades. Also, the risk of loss is potentially higher as
the size of the position increases.
12. Take responsibility
Too many traders lose and then announce
the market is after them. If you don't take responsibility, you won't learn
from your mistakes. Whatever happens, point the finger at yourself, in a constructive
way. What did you do wrong? How can you prevent it from happening again? Need
to change your trading plan?
13. Keep a trading journal
A record of past trades is an
invaluable tip. The software now allows you to quickly and easily store your
entire trading history, from entry and exit to price and volume. You can use
the information to identify problems and change your strategy so you can make
intelligent decisions in the future. You will never meet a trader who regrets
keeping a trading journal.
14. Know when to stop
If the strategy doesn't work, don't
keep throwing money around. Go back to the drawing board and think again. If
you can't stick to your plan, don't get in the hot seat, you'll just start on a
slippery and dangerous slope, and there's definitely no money at the end.
15. Explore options beyond stock
trading
Trading stocks is the starting point
for many day traders, but that doesn't mean that day trading is limited to just
trading stocks. Forex, futures and options are three asset classes that, like
stocks, have volatility and liquidity, making them ideal for day trading. And
often one of the alternatives could present attractive opportunities on a day
when the stock market is going flat.
16. Learning from experience
The successful trader never sits on his
laurels; he always wants to trade smarter. Doing this means staying on top of
things, leveraging trading books and staying up to date on new schools of
thought. Markets evolve and you must evolve with them.
Once the technical analysis is complete
and the trade is placed, traders should stop questioning themselves about the
correctness of their decision. All day traders suffer losses, so it's okay if
the trade occasionally doesn't work out. Especially for a beginning day trader,
no world will collapse because of this. When a loss occurs, the trader should
evaluate the trade objectively to ensure that they have followed their
self-established day trading rules. And, for example, did not get on or off at
the wrong time. Record the trades that went wrong, learn from mistakes made,
and move on to the next trade based on that experience.
Beginners need to understand day
trading and be able to answer related questions. Unfortunately, the term day
trading has negative connotations in many places. Therefore, below is a neutral
definition of day trading along with answers to the most important questions.
What is
day trading?
By the strictest definition, a day
trade is a position entered and exited in a single day. Day trading refers to
market positions that are only held for a short period of time. Typically, the
day trader opens and closes a position on the same day, but positions can be
held for much longer periods of time. An investor's position in day-to-day
trading can be either long (buy outright) or short (borrow assets then offer to
sell at a specific price). A day trader or intraday trader tries to take
advantage of volatility during the trading day to reduce overnight risk caused
by events like bad news etc. that may occur after the markets close.
What
is the risk in day trading?
According to practitioners, the
settlement of day trading positions in a single day significantly minimizes the
risk potential. “One of the best ways to control risk is to limit the length of
trades. The longer you are in a position, the more likely the price will move
against you. By day trading you eliminate overnight and weekend risk,
especially when trading closing markets such as stocks.”
This is what a well-known day trading
instructor recently said. Because day traders don't hold their positions
overnight, they avoid the possibility of a surprise in an increasingly global market.
Surprises come in the form of unfavourable economic news or negative earnings
reports released after the market closes. Even though after-hours trading is
available for many securities, the market is thin. And the position is likely
to be opened with a gap down at a dramatically lower price the next day after a
negative overnight event.
Additionally, day trading tends to
reduce, not increase, market volatility. Day traders typically look for
opportunities in small price moves up or down. Their daily trades provide
liquidity that keeps markets running smoothly, compared to lightly traded
markets that are subject to dramatic price swings. And no, day trading is not a
way to get rich overnight. Properly applied, it is a conservative investment
approach used by many institutions, as well as well-educated individuals who
choose to work full-time.
By the way!
They have a choice about using leverage
(buying securities with a broker line of credit), which can increase profits
but also increase potential losses. Day trading got a bad rap in the 1990s when
many newbies started day trading and jumped onto the new online trading
platforms without using tried and tested trading strategies. They thought they
could go to work in their pyjamas, so to speak, and make a fortune in day
trading with very little knowledge and effort.
This turned out not to be the case. However, day trading is not too
complicated if you learn a rules-based strategy for anticipating market
movements, such as that taught at an online trading academy.
What
do you need to start day trading?
To be a day trader you need some
electronic tools and services. While many people think that a daily trading
setup requires top-notch equipment and a large capital investment, this is not
really the case.
Here is a list of common items a day
trader will need:
Technology
Contrary to popular belief, day traders
don't need a heavily loaded computer with a dozen monitors to trade the
markets. Almost any standard desktop or laptop computer will do. Check with
your broker for computer requirements to ensure you have enough power to use
their software.
Trading desk
internet connection
Speed is critical to processing
orders in a timely manner in a fast-paced marketplace. Most cable and even
satellite providers offer enough bandwidth to connect to the broker's servers.
Typical packets with 20 Mbit/s are sufficient. Some merchants even use their
mobile connections at 5 to 20 Mbit/s, but we do not recommend this. The
fluctuating internet connections of mobile phones can result in delays in
transactions, often leading to unexpected losses.
Direct Access Trading Brokerage
Traders with a day trading approach
should be careful here. Many online brokers offer their services but route
orders through market makers which can delay processing and cost extra money.
Direct access trading brokerage
providers route orders to the markets faster and without intermediaries slowing
down the process. These brokers usually offer better commission structures and
more powerful software. Make sure you are familiar with the software and that
it is compatible with your computer before signing up with them.
trading platform
When it comes to broker software, make
sure the trading platform is user-friendly. Is it easy for you to analyze
trades and place orders correctly and quickly? Does the broker offer a
web-based version or do you need downloaded software? Both are fine, but the
downloaded version may have more features. Also, check if there's a mobile
version that lets you check in on the go and adjust positions if needed.
capabilities
Many people are in favour of training.
The problem is that education alone is not enough. While knowledge of how the
markets work and reading prices are required and provide an advantage, building
practical skills is also required to achieve the desired results.
Building a skill takes practice and experience.
However, trying to acquire trading skills without guidance can be a lengthy and
often frustrating process. For many, practicing and learning from a mentor's
experience is the best way to hone their skills and learn trading and investing
strategies that minimize risk. Even prominent figures like Warren Buffett and
Paul Tudor Jones had mentors. Mr. Buffett worked under Benjamin Graham and Mr.
Jones under Eli Tullis.
Where to start day
trading:
No tips will work if the day trading
broker used to trade does not have good terms and cannot execute the trades
quickly and cheaply. I can recommend Pepperstone and OctaFx Broker for trading
Forex & CFDs... Try a free demo account yourself:
Basics for day traders:
Before you can start buying and selling
Amazon, Google stocks or any other market Like Forex, you need to make sure you
have the basics covered. These basics include:
A Reliable Internet Connection – Every second counts when you want to capitalize on a high
volume of low-value intraday trades. You don't need your trade executions to be
hampered by a lost internet connection. So use a cable and opt for at least a
mid-range Internet package.
One Computer – One of the top tips for beginners is to have access to
two monitors. If your computer crashes at a crucial moment, you could lose all
your hard-earned winnings. So have at least one relatively fast and reliable
computer, preferably two.
A trading platform – You will be spending most of your day here, so you need
to make sure you choose a platform that suits your style and needs. Download a
few different platforms and test them out before you decide. A Broker - Your
broker will be your gatekeeper to the market. He will facilitate your trades
for a commission on your trades. If you do that many trades every day, an
expensive broker could seriously eat away at your profits in the long run. Do
your homework and find a broker that is reliable and offers a no-fuss,
competitive fee structure.
Time schedule
While some day traders are on every day
from 9:30am to 4:30pm EST (for the US stock market), many only trade for a 2-3-hour
window instead. Especially as a beginner, this will prevent you from making
careless mistakes as your brain will shift down a few gears when your focus
falters. The hours you want to focus your attention on are as follows:
Time unit trading
Forex Market – Despite trading 24 hours
a day throughout the week, the most popular pair EUR/USD is most volatile
between 06:00 and 17:00 GMT. In particular, between 12:00 and 15:00 GMT the
largest price fluctuations can be observed.
Stock Market – You want to start early, within the first few hours after
the market opens and in the last hour before the market closes. So focus on the
time between 09:30 - 13:30 EST and 15:00 - 16:00 EST. Again, you will see that
the biggest price movements happen between these hours.
Futures Market - This is another market you want to hit early on. From
8:30am to 11:00am EST you will find the best opportunities. Futures markets
close at different times, so do your homework first. Remember that the last
hour of trading also carries profit potential.
Demo accounts – They are an important tool
An essential beginner tip is to practice with a demo account first. They are usually funded with simulated money and give you a safe space to make mistakes and develop your strategies. They are also a fantastic place to learn about platforms, market conditions and technical analysis. They are free and easy to use. What do you have to lose?
How to start day trading?
Once you have learned a strategy and
are trading it profitably in a demo mode, you can now get to grips with trading
in a live account. Here are the steps you need to follow:
Open a trading account and transfer
funds to it
Develop a written trading plan that you
can review each morning
Make a list in the morning
Trade your plan and stick to it
Review your trades at the end of the
day
Did you know?
They have a choice about using leverage (buying securities with a broker line of credit), which can increase profits but also increase potential losses. Day trading got a bad rap in the 1990s when many newbies started day trading and jumped onto the new online trading platforms without using tried and tested trading strategies. They thought they could go to work in their pyjamas, so to speak, and make a fortune in day trading with very little knowledge and effort. This turned out not to be the case. However, day trading is not too complicated if you learn a rules-based strategy for anticipating market movements, such as that taught at an online trading academy.
This leads us to our next topic:
How much money do you need for day trading?
This is one of the most frequently
asked questions, to which there are very different answers on the internet. How
much capital you need depends on whether your day trading:
Want to make it your sole full-time job
Or just want to do it as a part-time job
to earn a few extra euros here and there
Investments in trading
As you probably know, you can open a
small account with as little as 20 -50 EUR or USD and trade it up in no time. My
opinion is that you don't need a lot of money to start day trading. However,
there are two questions to ask yourself when deciding how much money you need:
How much do you want to earn per day?
How much money do you actually need to
start day trading with?
Once we know the answers to these
questions, all we have to do is do a few simple calculations. Let's say you
want to make $100 a day, but you only have $1,000 to add to your day trading
account.
This means that if you trade a share at
a price of EUR 2.00 per share, you can buy 500 shares
This means that the stock must rise 20
cents in your favour to reach your $100 goal.
This is a very simplified example as we
have not taken into account the margin which would allow you more buying power.
Day trading with cash versus margin:
Day trading with a cash account means just that. You only use the cash that you
have in your account. A margin account gives you the ability to use leverage or
margin to increase your buying power by borrowing money from your broker. The
following are the main differences between a cash account and a margin account
when day trading.
Cash Account: You can day trade as much
as you like as long as your funds are balanced (takes up to two days from trade
date to settlement). You can only trade with the cash amount that you have in
your account. Placing positions with pending funds may result in account
suspension.
Margin Account: You can buy more assets
than there is cash in your account because you are granted leverage by the
broker. However, you can also lose more than you have in your account because
you are trading with leverage.
As you can see, there are some major
differences, but most day traders trade on margin due to a lack of liquidity.
Trading
psychology tips
You can have the best strategy in the
world, but if you don't stay disciplined and keep your emotions in check, you
risk losing profits. The first thing to remember is that it is human nature to
show emotion and to respond with emotion, especially when money is at stake.
Fear, greed and ambition are three of the most common and potentially dangerous
emotions. Luckily, we've listed the top psychological tips to help you keep
your cool.
Accept Losses - When you make so many trades every day, you are bound to
lose at times. It's how you react to those losses that will define your trading
career. The loss trigger can quickly lead to revenge trading, micromanagement,
and bad decisions. Instead, take small losses and remember that you are doing
the right thing, which is sticking to risk management.
Control Greed – Greed often affects traders in the following ways: you
enter a trade at $80 with a target of $95, but then it hits $95 and you think,
“I'll hold on a little longer and increase profits further. This only ends up
with you eventually making big losses. The solution: Stick rigidly to your
strategy. Think long-term and don't deviate from your strategy, there's just no
reason to gamble.
Fight the Fear – Yesterday was a bad day, you lost over €1,500 and now the
fear is setting in, you hesitate. This hesitation will cost you money, and as
we mentioned earlier, you should take losses. If your confidence has taken a
hit, a useful tip is to remember to religiously adhere to your risk rules. If
you have an effective risk management strategy, you will never lose more than
you can afford.
Think Ahead – When you open a PDF of Day Trading Psychology Tips, it will be one of the first things you will see, and with good reason. Your strategy is to make money over the long term, so don't focus on immediate results. Your strategy should consider wins and losses, always keeping the long-term process in mind.
Gold Trading Tips:
Gold often offers attractive price
action. It's a popular choice among traders looking for consistent profits. But
are there any tips for day trading with gold?
Correlation – This allows you to double check your trade predictions.
For example, gold is highly correlated with the yen as both are considered
"safe havens". So you may be able to use other assets to support your
decisions.
Look Outside of the box – In today's global economy, no markets move independently,
and gold is no exception. Make sure you stay abreast of developments in other
markets that could affect your own trading decisions.
Consider Investor
Sentiment – By checking traffic
to gold-related websites, you can get a measure of current interest in the
market. You can also track poll results and news events. All of these can help
you make informed decisions.
Oil Trading Tips
Exchange Rate – Crude Oil is traded in
US dollars, so the exchange rate is something to watch out for when making
short-term trades. For example, a weak US dollar leads to a rise in the price
of crude oil.
Supply and Demand - Consistent profits
depend on constant supply and constant demand. This means that it can prove
useful to keep an eye on the domestic and international supply markets.
Resources like the Baker Hughes Oil Rig Census and US Crude Oil Weekly
Inventories can help you with that.
Think outside the box - the US, the
Middle East, China, Japan, India and Russia are all major players on the oil
stage. Unrest in one market could potentially impact the rest of the markets,
so it doesn't hurt to keep an eye on the geopolitical environment.
A quick Google and you'll also find
daily tips for trading, ETFs, CFDs, options and commodities. You will also
likely come across trading tips, strategies and techniques in PDFs. However,
the advice mentioned on this page and in the asset-specific tips above is
applicable to almost all instruments.
.
Check Broker Fees – There is a big
discrepancy between the commission fees charged by brokers, so it's important
to do your homework. Brokers in specific countries where you want to trade your
stock often offer cheaper fees.
Take Advantage of the News – The German
markets are extremely vulnerable to news announcements, particularly from big
companies and governments. When it comes to day trading, every second counts,
so you need a news medium you can rely on.
Taxes
Taxes, such as brokerage fees, will eat
into your profits, as will any penalties for failing to pay the correct fees.
But with so many differences between tax regimes, it's not always easy to know
where you stand and what your obligations are. The best free tips will
therefore help you to maximize your profits while remaining within the
parameters of tax laws.
Source - Where did the tip come from? Is it from a reliable and
impartial source? Or the source could have an ulterior motive, eg a broker
advising you to go with a certain type of broker
Time Frame – The effectiveness of trading tips depends on what type of
trader they are aimed at. A long-term trading strategy tip could have
disastrous consequences if applied to intraday trading. Make sure the tips and
advice are tailored specifically for the intraday trader.
Market Specific – If you trade the
cryptocurrency market on a day-to-day basis, consider whether the tip you just
read applies to trading Bitcoin and Ethereum. Not only can futures market
trading tips be useless when applied to the cryptocurrency market, but they
could actually hamper your strategy and increase your losses.
Last tips and conclusion
The free intraday trading tips on this
page can be used by both novice and advanced traders. When reading the tips,
you should consider your circumstances. Also, remember that the traders
involved not only consider day trading tips, but also long-term trading
psychology and risk management, because they know that consistent profits only
come to those who have a longer-term perspective, even though they are a
short-term trader.
