DAY TRADING FOR BEGINNERS

Chapter 1: Day Trading

Day trading is the purchasing and selling of securities within a single trading day in any marketplace at commonly stock markets and foreign exchange (FOREX) to obtain a compound of short-term loans. Day traders involved in this are fully investing in this trading activity with multiple learning sources, learning time, and good kind of capital often end up being so successful. Being successful in day trading means acquiring large chunks of profits amounts.

Characteristics of a Day Trader

Being a day trader does come out naturally; a specific personality and traits are duly required. Below are some of the characteristics of a day trader.

• Disciplined

This is a major trait that day traders need to input. Day traders should always be disciplined to remain input when no opportunities emerge and act so fast when opportunities avail. Acting fast also includes strictly considering the step by step rules and obligations initially formed in their big plans.

• Open-minded

Day trading is a learning kind of income-generating engagement, implying that there are going to be happy times and the downfalls. Save yourself and learn from all that. Improve the happy times and completely discard the wrong downfall moves. Being exposed to the winnings and the failures makes you open-minded, master of all possible win moves.

• Technology Fan

Day trading is carried out in various trading platforms and systems that a trader should be familiarized with. This should not scare you. Getting to know how they work does not, in any case, require you to be a computer whiz. Get to learn the basic moves and grow technologically with time.

• Mentally Tough

Losing market trades are constant; most successful traders will have losing trades every single day. They typically win slightly more times than they lose. It is so important too stay focused and rational during a losing period and do not let in the basic fact that money has been lost too. Focus on the future day trading activities by implementing some of the strategies outlined in a big plan.

• Independence

Independence is striving to build your toolbox that is and willy forever lead you. Reading trading books to trading books, watching every video, interacting with one mentor after the other, can be a total miss. What if different books have one confusing point on a particular field? What is your YouTube subscriber who decides to quit vlogging? Always grasp the basics after in-depth research and day stay put. Dare to yourself that you got you and get the large chunks of benefits. However, when you feel you are so lost, do not hesitate to get assistance. Most importantly, master and analyze successful moves and let them be part of your big plan.

• Patience

Good things do take quite some time. In every strategical move, you try to make, think about it carefully, but this should not make you paranoid. Act accordingly with many disciplines to reduce the number of losses likely to be incurred during various day trading activities.

Also, a patient day trader is a learning day trader. Day trading is not going to be easy at first, but with time, where you will be equipped with lots of skills and experience, things are expected to flow very smoothly. Hey, be patient.

• Future-oriented

Getting stuck in the past makes you much of a prisoner. Forward-thinking lets you see the possible moves and gives you the decisive air when the next trading activity will occur considering the set protocols set in the day trader’s plan. Being future-oriented incites forward-thinking, which is involves mental thinking and knowing your next possible moves after a considerate examination. Being future-oriented hastens and simplifies the day trading operation moves, and the chances are that they are going to be successful.

• Financial Freedom

Day trading does not require you to be a tycoon necessarily, but you are required to have a specific amount of money that has been precisely selected to begin day trading with. Remember, the first times are always a win or lose situation as you continue to learn and grow. This particular set of money can be lost too. Be careful about how you handle your finances in day trading. Not every story is a good story.

• Enthusiasm

A great interest in something is a pending successful goal.  A great enthusiastic inclination to stocks, securities, commodities, markets, the business gives you the thirst to learn and master what day trading is all about. These are signs of a future successful day trader.

• Experience and Familiarity

Experience comes with pretty much of downfall lessons and learning. Expose yourself to different learning sources and master every profitable move during day trading to squeeze out the best out of that. Getting the experience and familiarity of the trading platforms and various strategies needed to be successful at day trading is worthwhile.

Long and Short Trade

In stock markets, the terms long and short imply whether a trade was initiated by first selling or first purchasing. A long trade is initiated when the day trader purchases at a particular price and to sell at a higher price in future in a bid to get profits. In contrast, short trades are initiated with selling, before even purchasing with the intention of repurchasing at a lower price from the market and eventually acquire profits.

Short selling is simply:

• Borrow the stock.
• Sell the stock.
• Buyback the stock?
• Profit or loss?

Risks are also involved during short selling; stock prices may end up being so high, and normally, there is no limit to how a particular price can go.

During long trading, your profit potential is unlimited since the price of the asset can rise indefinitely.

Day Trading as a Source of Living?

The first point to take down is yes; day trading is a lucrative engagement. However, that does not mean that it is way simple than any other actual job. And yes, you get to be your boss. You get to do it your way, on your time, with your strategies for a living. It is amazing. We do not get so lucky in this life, though; drawbacks have to appear too. Below, let us venture on the different pros and cons that come with day trading.

BENEFITS

• Own Boss

Getting to work the way you desire has always been the best thing ever.  Your plan, your moves, your strategies. This is so good. Imagine going for a wanting vacation without first passing through the Human Resource department with some great explanation so that your reason can be valid enough.

Moreover, getting to work for you already gives you the full energy to make things alive. You have enough spirit of learning and bringing out the best in you. Do yourself a huge favor and be your boss.

• Comfort

A peaceful working environment enhances the quality of the end product, or rather, the aftermath turns out to be so successful. A peaceful environment creates a much-concentrated workspace, and day traders get to strictly master the actual day trading activities and learn more every day. This will, in the end, accomplish their big plans as indicated by the large chunks of profits that would be made.

• Risk Management

Exposure to day to day cases of day trading will make you a better risk-taker. Day trading is made up of so many risks that act as a day to day lessons. The trader gets to master the good moves and discard the previously made mistakes to become a successful day trader.

• Technologically Advantaged

Day trading exposes you to the internet as you try to get access to various sources. The internet is technology, so full of technology. You are exposed to new sites and different technological techniques. This builds you because technology is the present and the future.

DRAWBACKS:

• A Solitary Lifestyle

Day trading is a peace of mind activity, implying that physical noise should not be part of it. You are going to enjoy day trading if the best company is normally just your company.

• Inconsistent Salary Figure.

Your smart trading work will be reflected by the salary figure you obtain every single trading day. When you decide to take a day off, no gains are promised. At one particular point, you may gain like $3000, and the next day you experience $2000 loss, no consistent salary figures are promised, your smart moves are the ones that will get you a Lamborghini.

Decide on What and When to Buy

When and what exactly to buy in day trading is so fundamental. Let us outline some of the factors that need to be considered.

1. Understand the level of risk is involved and what kind of risk level is suitable for you.

There is a bunch of stocks to trade with different rates of volatility, price, and volume characteristics. There are different kinds of risks experienced in every level of day trading. As a beginner, pick the risk level that matches your risk management rate. Day to day trading activities exposes you to several kinds of risks that frequently occur, so every trading day becomes a learning day. With time, a beginner is exposed to all kinds of possible risks that are likely to be educative, and he or she gets to be a pro in handling risks.

2. Analyze and come up with the right kinds of prices to buy.

Your personality describes you, and therefore, judging from it, you should favor yourself with the kind of day market you want to get involved in. For instance, if you have a fast mind yet you can focus despite the string of actions needed at a particular circumstance, you should go for short term trading.

3. Focus and analyze a particular stock.

Keep it simple. Deal with a particular stock at a time. Understand how it is handled, explore all its sides, and examine how it is operated at multiple time frames. Every stock has its characteristics and personality, meaning that you need to understand its behavior to anticipate the right moves.

4. Explore several trading charts to understand the stock movement and the overall market performances.

Charts act as a pictorial representation of the actual activities that are taking place in the day trading market. They help to monitor and express every moment taking place during trading.  A beginner is obliged to master and learn every move that is depicted from the charts for future successful moves in day trading.

5. Be disciplined and strictly stick with your plan.

Strictly following up the initial strategical set plan is a successful move-in day trading. Being disciplined enough to follow what was examined and noted down as a step guarantees the day trader the zero chances of incurring large chunks of losses.

6. Time frame.

Traders spend almost 30 seconds in choosing a time frame, not because of their trading technique or trading market, but basically by just their personality. For instance, traders to make so many trades during the day end up choosing shorter time frames, while traders to make like two to three trades in a particular trading day pick longer time frames. Time frames are not constant in the trading day since the activeness of the trader in that particular day says it all.

Decide When to Sell

1. Mental fatigue

Brain fatigue incites poor trading performances that correspond to long strings of stop losses. Trading for just two or three hours keeps you set in your game, and the chances of excelling in your trading activities are pretty much high.

2. Trading at the opening

Novice is advised not to engage in the first 15 minutes of a new trading day. Most seasoned traders believe that at this period, a lot of dumb money is initiated. Dumb money is simply the actual amount of capital that most traders use as they sell and buy market prices based on the immediate previous trading episodes during the start of their trading day. Professional day traders are advantaged in this particular morning.

3. Ending trading by 11.30

10.30 am ET is considered to be the best day trading period. It offers the biggest moves in the shortest amount of time. Well, you can decide to extend an hour since that is when volatility and volume tend to tamper off

4. The last hour.

Most traders are likely to trade the last hour, which is from 3 pm to 4 pm ET. This period is recommended because most traders have had a long break session since then and are likely to have resurfaced and focused. The last hour is much like the first hour, where a lot of dumb money can be depicted as many traders try to unfold how the day like likely to end based on the happenings during the day. The last hour of the day can be active with such big moves on high volumes.

5. Best day and month.

A lot recommend that Friday might be the best day to trade before that Monday dip happens if it the first Friday of the month or when it precedes a three-day weekend.

Day Trading Risks

• Financial breakdown

It is so advisable that you interact with the kind of capital that you are ready to lose. Due to the meager time frame during day trading, prices fluctuate from time to time. The amount traded with is not so predictable, and it can be easily subjected to a major loss. Be careful with how you handle your finances, and the financial breakdown can, too, be a possible option.

Also, day traders must payday trade firms’ commissions and tutorial costs to be subjected to the trainers. Day trading is cost-effective.

• Margin borrowing

Margin borrowing is the loan amount you acquire for the essence of purchasing securities. The amount is likely to grow from the impacted interest and potentially put the trader in a position of over-borrowing. It is highly recommended that the trader should comprehend how margin borrowing goes about before trading on borrowed capital.

• Market movements

The market moves in less than a hundred points in either direction in a single trading day. Traders normally spotting every market move are likely to acquire higher rates of profits in that they can observe and act on several moves happening, and they may be after all be successful. Being late on a trade can convert a potential profit to a loss. Try to stay updated on what is happening in the trade market.

• Psychological addiction

Day trading is considered to weigh the same in addition to gambling. Day trading is highly addictive since the traders are said to turn out competitive and of above-average intelligence eventually.

• Slippage risk

This kind of risk involves hidden costs that are normally associated with every transaction. It normally takes place anytime in the market, but mostly when you are using orders during high volatile times. It also occurs when you place huge orders on assets with less interest in purchasing. Slippage risks mostly affect forex and stock traders in the market. Try your best to avoid slippage risks by using limit orders in trading rather than market orders.

• Risks of over-trading

Overtrading occurs in several circumstances. You may incur over trading in the aspect of trying to recover for the made losses. Another way, you may try to average your positions when stop losses are approaching and end up causing over-trading. Try to avoid such risks in all aspects.

• Stock selection

Stock selection is so fundamental in day trading. If you get your stock selection wrong, this is going to be so wrong for you. Select stocks that are quite liquid and exhibit clear trading patterns that are going to work for you. Wrong stock selection incurs large chunks of losses, which will most probably diminish you.

• Technical analysis

Technical analysis is not a perfect science. Assumptions that past patterns are likely to repeat are never good assumptions, and which in many cases incur to major risk of stop losses triggering on either side of the trade.

• Market volatility

Market volatility is the norm in market day trading. Even with your best-set strategies and well-picked kind of stock, day trading episodes are not predictable. External macro factors at day trading make the market volatile, triggering a string of stop losses, and after all, you end up putting your day trading capital at a bigger risk.

• Emotional trading

Again, failing to plan is planning to fail. Some of the day traders target the hot stocks probably recommended by several spam email reports in the belief of acquiring major profits. Okay, a turn of events is likely to unfold. Day trading is a kind of systematic income-generating activity. A strategical plan with major points to note when handling day trading should be formulated. It ought to guide you on several major day trading moves, mistakes, and their solutions, and also updated keywords he or she learns as day trading keeps advancing.

• Trading with small amounts

There is a limit that has been set to day trading. Slightly bigger limits are recommended to avoid many risks from being incurred.

Chapter 2: Day Trading Advice to Beginners

Day trading is not simple at first. Skills have to be built, and some policies are set. All in all, it is a learning process that calls for patience and perseverance. Let us look at various fields at how you can get motivated this good day.

Day Trading Strategies for Beginners

Financial analysis: Well, money is a very important asset. With that in mind, you need to be super careful in how you plan on using it. Failing to plan is planning to fail. Beginners are advised to use just a little amount of capital for a start-up until the time they are fully experienced in the day trading track. Most of the traders do not have more than 2% of the capital in the trade.

Furthermore, as a beginner, always consider slow but sure steps. Get to grow little by little. This is a journey with lots and lots of protocols to learn and master with a successful and rich endpoint.

Seek every kind of learning material: Learning makes you educated on what you are doing. It makes you informed, and you get to learn every living trick in that particular field (day trading). Take each day as a learning day in that you get to learn something new in a particular section. You get to grow. Being involved in day trading is a course journey itself. Below are some sources of learning materials for day trading:

Trends: Get to follow every trend and get the idea of what is happening. They are highly educative when it comes to future prediction analysis.

Consistency or stability: Another idea to add, day trading is quite logical. Day trading cannot be analyzed by fear or even greed. Mathematical approaches have to be considered. Set strategies have to be put in place too! Examine every logical operation bound to happen during day trading to possess certain clear stability. Once stability has been established, expect some big-time profit rates and an excellent reputation.

Timing: The trading market becomes volatile every single trading day. Experienced traders have mastered the moves, and so they are quite sure about what steps to take next once they get to read the structures. For beginners? Quite not sure of what move to take. A slow but sure protocol is fundamental too. As a beginner, do not be quite in a rush to predict. Take one or more time to examine every single trend and get your desired prediction. Do not be too slow, though, and you may end missing so much.

Scalping: Scalping a kind of strategy, takes advantage of the small kind of prices that happen drastically during the day trading sessions. This kind of mechanism involves getting engaged so quickly and so fast and then leaving right away.

Profitable Type of Day Trading

What kind of day trading assets are much profitable? Below are some of the popular markets:

• Forex markets.

Forex markets are normally carried out on the margin.  you can have more trades than what you have as a deposit. This could contribute to high profits on the business. Additionally, it depends on your day trading strategies and how you handle the risks in the business.

• Stock markets.

Stock markets are so popular that you buy and sell shares of a company.

• Options markets.

A trader in options trading can make a profit either by being a buyer or a seller. An options buyer can make a profit when the stock becomes higher or lower than the fixed price, whereas an options seller makes a profit when the asset settles above or under the fixed price.

• Future markets.

Future markets are also a profitable type of day trading. It depends on your experiences in trading. Also, to be profitable in this type of trading depends on the strategies you have employed in trading.

Day Trading Success Rules

• Strictly follow your trading plan.

A disciplined life is sure of a successful life. After you have outlined your intended plan, be sure to be strict in following up. Being self-disciplined in your set target makes you ambitious, and chances of being successful in the future are high. A miss at your discipline is a great downfall, follow your desired motives step by step and erase the idea of getting rich quickly because it is a poisonous thought.

• Learn every single day.

Every person has a different way of learning. Make sure you set proper learning methods strategies.

Below are the most widely used methods of communication:

Videos are said to be popular because they are much practical. They outline the structural and visual learning about a particular topic and enhance much comprehension.

Blogs have become a great source of information because they provide detailed and reliable sources of information. To identify the best blogs out, try googling, and also counter check the blog’s rates before you commence reading. Find the highly rated kinds of blogs and highly interactive depicted by the presence of a couple of comments.

• They are learning by forums.

Well, forums are a kind of medium where opinions and different angles of views concerning a particular problem are openly discussed.

• Portable Document Format (PDF).

PDFs are easier to find one from the internet and download it right away. They are pretty much available, reliable, and easy to go through and also make some modifications. There are different kinds of PDF with different kinds of information. Always double-check whatever you are reading. Remember to pick your PDF that goes hand in hand with your level of expertise — for example, Day trading for beginners PDF.

• Online courses.

Online learning has become a dominant kind of learning. Youtube channel has become a favorite online learning channel for many people. The Internet is generally flooding with basic to advanced courses for like every field in any interest in this world. Look up to such educative videos. Explore the kind with a maximum number of views and discover the possibilities that are just about to unfold.

Remember to record(takedown) any kind of viable information that happens to be so important and outline the right steps expected to be established. This is the kind of strategy needed to produce large chunks of profits in the future.

Books are made of pages. Pages contain a page of any information concerning the topic in question. Okay, I am trying to justify that books contain quite a lot of information because of the number of its components. This implies that books are quite detailed and can be a good option for beginners because all they first need is quite some information.

Charts are good graphical measures at day trading. They symbolize the progress and every activity taking place during day trading. They monitor and help in examining the day trading events and aid to set up several possible likely to happen.

• Do something irrelevant once in a while.

Well, too much of something can indeed be poisonous. Take yourself out and do something different to enhance peace of mind and better future performances.

How to Be a Successful Day Trader

Let us look at some of the strategies and rules that need to be mastered and take into action to hit the major end goal, making large chunks of profits. Here we go:

• Monitoring the trend.

Trends are a graphical measure of the actual activities that are taking place in the day trading market.

Any trader closely following up the trend makes him or her informed and accurate in his or her levels of predictions, and the chances are that winning may be their middle name. They can purchase when the prices are high and short sell when they drop. Analyzing trends has several assumptions in that, if there are continuous cases of rising prices, possibilities are that they will constantly happen and vice versa.

Remember that day trading is not about heroes and losers; it is all about patience and persistence. Honey, try to be patient and persistent.

• News on trading.

News always comes in two ways; good news and bad news. Well, good news on day trading always gives the traders and brokers a huge motivation to purchase prices at good rates. On the other hand, when bad news comes in, the traders are allowed to short sell prices. This kind of strategy can be used as a great move in making huge amounts of profits at a particular season and induce high volatility rates.

As discussed, scalping takes advantage of the small kind of prices that happen drastically during the day trading sessions. This kind of mechanism involves getting engaged so quickly and so fast and then leaving right away.

• Contrarian investing.

This kind of strategy describes the assumption that prices will go up and most probably reverse and then drop. The contrarian buys during fall or short sell during the rise periods. The attitude in this kind of strategy defines that the whole expectation idea is to subdue to change and that things are to head in a reverse kind of direction.

• Financial management.

Capital is so lucrative in any kind of income-generating activity. There are always going to be several wins and losses. Not to sound so risky, most of the traders will not input 2% of their capital in any line of trade. Be careful in whatever you consider as an investment; money loss is ever an option too.

Also, there maybe be cases where brokers demand high rates of commissions, do not fall into that trap. That is going to cause you big time. Consider the rates of commissions demanded by brokers in the first place because too many expenses in commissions can incur low rates of profits, basically meaning that losses will be incurred.

• Proper time management.

Day trading is a journey. A certain market trading journey, meaning that for it to be called a journey, a particular process is established. A certain planned time is encouraged. Monitor everyday trading move that occurs and will occur, for it makes you learn and experience all about day trading. Good things take time, mastering the day trading occurrences is quite an investment. Remember those good investments imply good rates of profits.

• Consistency/ Stability.

Another point to add, day trading is quite logical. Day trading cannot be analyzed by fear or even greed. Mathematical approaches have to be considered. Set strategies have to be put in place too! Examine every logical operation bound to happen during day trading to possess certain clear stability. Once stability has been established, expect some big-time profit rates and an excellent reputation.

The trading market becomes volatile every single trading day. Experienced traders have mastered the moves, and so they are quite sure about what steps to take next once they get to read the structures. For beginners? Quite not sure of what move to take. A slow but sure protocol is fundamental too. As a beginner, do not be quite in a rush to predict. Take one or more time to examine every single trend and get your desired prediction. Do not be too slow, though, and you may end missing so much.

This kind of strategy defines revolving around new sources and also identifying the substantial trending moves at high stake. You basically should maintain your current position, be alert with the reversing signs, and face a different direction.

• Strong focus on one particular market.

Many traders become overexcited and want to trade with all markets. This should not be the case; you will end up being confused, not knowing which trade to focus on. It is normally healthy for the business when you decide and focus on one trade, be good at it. Focusing on many trades at a go will make you lose.

• Trading pivots.

Trading pivots come in when you buy low at the end of the day, and you sell at the high end of the trading day. Once you get to master these tactics, the chances are that you will be an expert in comprehending the volatility of the market and therefore declare yourself successful using this kind of strategy. However, trading pivots are not the kind of day trading to be implemented daily.

• Select a good trading software.

To be successful, always choose a stable trading platform. A platform that provides some features such as charting tools as well as tools for analysis. Such software will make your work easier, and you will be able to stay up to date as compared to systems that crash down frequently. Do not forget to consider the cost of the software and how legit your broker is.

• Risk Control.

For beginners, it is highly recommended that they engage in trading infrequently as a way of avoiding too many risks. The essence of this is to help them master their moves and learn a lot. Day trading is not just about profits only, and it is about taking each day as a learning trading progress. Predict the trends at least after some minutes and not just seconds. I am familiar with the adage that declares that, commit many mistakes to learn highly, but honey, this is some real cash being retrieved from your pocket, you can become poor any minute. Slow but sure steps are highly recommended. Take each trading day as a lesson. With this, tricks and knowledge are so equipped, and with no time, you will be so okay.

• Passive position management.

A novice day trader is prone to adjust their target and stops abruptly because of being controlled by certain emotions. These kinds of emotions are caused by the sudden updates of the figures and trends on the screen that keep changing with time. This is so confusing for the beginners and after all causing them to alter their predictions hence leading to a great downfall. Only highly experienced and confident day traders can analyze the updates because they may know what they are doing.

For the novice day traders, leave the targets and the stops on their own, and learn how you would passively control all these. Reach for some paper material and sketch and assume how the aftermath would be without interfering with your active trends. Do some in-depth examination and comprehend why every move is happening. In the end, compare what you would have affected your trading account if, at all, you altered the previous trends. This is a learning process. Do this for quite a while, and within no time, day trading becomes your all-time income-generating hobby. Yes!

• Protect your capital.

Losses are normally involved in almost all businesses. Despite that, try your best and protect the capital of your business. This can be achieved by shunning from all unnecessary risks that come along in businesses. Trust me, and this will bring success to your business.

• Risk reward ratio of 3:1

Comprehending the proper 3:1 risk-reward ratio is so important. This kind of ratio reward encourages a trader to lose small and then win big despite the frequent times you lost on the trading platform. The moment you gain some wide experience, the risk-reward ratio gets higher and higher, meaning that you are slowly advancing and enjoying some good profits. This is the kind of measure we need to strategize to grow as traders.

• Patience and persistence.

Plan your trades and then trade your plans. This kind of strategy defines the behavior where most traders do not trade daily. They have this kind of paradoxical behavior where they just check up on the trends without necessarily acting up because of the fear of outlining the wrong prediction. Well, this is not a way of learning. Day trading calls for patience and persistence where several wrongs did are part of the journey, and learning happens a lot through that. Plan your trades carefully and then predict, see how this goes. Be patient and persistent in every move you make. After all, good things always take time.

• Hard work.

Day trading requires you to be hardworking for you to be successful. It is not like the entertainment business which you can joke around with. It needs maximum practices into trading and discipline. You have to be trading frequently and stay updated on the stock price fluctuations.

The above-discussed strategies help to improve time factors, skills, financial management operations, to grow as a person, risk management and most importantly, you get to learn

Chapter 3: Day Trading Tools

For you to carry out day trading successfully, there are several tools that you need. Some of these tools are freely available, while others must be purchased. Modern trading is not like the traditional version. This means that you need to get online to access day trading opportunities.

Therefore, the number one tool you need is a laptop or computer with an internet connection. The computer you use must have enough memory for it to process your requests fast enough. If your computer keeps crashing or stalling all the time, you will miss out on some lucrative opportunities. There are trading platforms that need a lot of memory to work, and you must always put this into consideration.

Fast Internet Connection

Your internet connection must also be fast enough. This will ensure that your trading platform loads in real-time. Ensure that you get an internet speed that processes data instantaneously to avoid experiencing any data lag. Due to some outages that occur with most internet providers, you may also need to invest in a backup internet device such as a smartphone hotspot or modem. Other essential tools and services that you need include:

Brokerage

To succeed in day trading, you need the services of a brokerage firm. The work of the firm is to conduct your trades. Some brokers are experienced in day trading than others. You must ensure that you get the right day trading broker who can help you make more profit from your transactions. Since day trading entails several trades per day, you need a broker that offers lower commission rates. You also need one that provides the best software for your transactions. If you prefer using specific trading software for your deals, then look for a broker that allows you to use this software.

Real-time Market Information

Market news and data are essential when it comes to day trading. They provide you with the latest updates on current and anticipated price changes on the market. This information allows you to customize your strategies accordingly. Professional day traders always spend a lot of money seeking this kind of information on news platforms, in online forums, or through any other reliable channels.

Financial data is often generated from price movements of specific stocks and commodities. Most brokers have this information. However, you will need to specify the kind of data you need for your trades. The type of data to get depends on the type of stocks you wish to trade.

Monitors

Most computers have a capability that enables them to connect to more than one monitor. Due to the nature of the day trading business, you need to track market trends, study indicators, follow financial news items, and monitor price-performance at the same time. For this to be possible, you need to have more than one processor so that the above tasks can run concurrently.

Classes

Although you can engage in day trading without attending any school, you must get trained on some of the strategies you need to succeed in the business. For instance, you may decide to enroll for an online course to acquire the necessary knowledge in the business. You may have all the essential tools in your possession, but if you do not have the right experience, all your efforts may go to waste.

Day Trading Pricing Charts

Charts are used by traders to monitor price changes. These changes determine when to enter or exit a trading position. There are several charts used in day trading. Although these charts differ in terms of functionality and layout, they typically offer the same information to day traders.

Some of the most common day trading charts include:

1. Line charts
2. Bar charts
3. Candlestick charts

For each of the above charts, you must understand how they work as well as the advantages/ disadvantages involved.

Line Charts

These are very popular in all kinds of stock trading. They do not give the opening price, just the closing price. You are expected to specify the trading period for the chart to display the closing price for that period. The chart creates a line that connects closing prices for different periods using a line.

Most day traders use this chart to establish how the price of a security has performed over different periods. However, you cannot rely on this chart as the only information provider when it comes to making some critical trading decisions. This is because the chart only gives you the closing price. This means that you may not be able to establish other vital factors that have contributed to the current changes in the price.

Bar Charts

These are lines used to indicate price ranges for a particular stock over time. Bar charts comprise vertical and horizontal lines. The horizontal lines often represent the opening and closing costs. When the closing price is higher than the opening price, the horizontal line is always black. When the opening price is higher, the line becomes red.

Bar charts offer more information than line charts. They indicate opening prices, the highest and lowest prices as well as the closing prices. They are always easy to read and interpret. Each bar represents rice information. The vertical lines indicate the highest and lowest prices attained by a particular stock. The opening price of a stock is always shown using a small horizontal line on the left of each vertical line. The closing price is a small horizontal line on the right.

Interpreting bar charts is not as easy as interpreting line charts. When the vertical lines are long, it shows that there is a significant difference between the highest price attained by security and the lowest price. Large vertical lines, therefore, indicate that the commodity is highly volatile while small lines indicate slight price changes. When the closing price is far much higher than the opening price, it means that the buyers were more during the stated period. This indicates a likelihood of more purchases in the future. If the closing price is slightly higher than the purchase price, then very little purchasing took place during the period. Bar chart information is always differentiated using color codes. You must, therefore, understand what each color means as this will help you to know whether the price is going up or down.

Advantages

• They display a lot of data in a visual format
• They summarize large amounts of data
• They help you to estimate important price information in advance
• They indicate each data category as a different color
• Exhibit high accuracy
• Easy to understand

Disadvantages

• They need adequate interpretation
• Wrong interpretation can lead to false information
• Do not explain changes in the price patterns

Tick charts

Tick charts are not common in day trading. However, some traders use these charts for various purposes. Each bar on the chart represents numerous transactions. For instance, a 415 chart generates a bar for a group of 415 trade positions. One great advantage of tick charts is that they enable traders to enter and exit multiple positions quickly. This is what makes the charts ideal for day traders who transact volumes of stock each day.

These charts work by completing several trades before displaying a new bar. Unlike other charts, these charts work depending on the activity of each transaction, not on time. You can use them if you need to make faster decisions in your trade. Another advantage of the tick chart is that you can customize each chart to suit your trading needs. You can apply the chart to diverse transaction sizes. The larger the size, the higher the potential of making a profit from the trade.

When used in day trading, tick hart works alongside the following three indicators:

• RSI indicators – these are used when trading highly volatile securities. They help you establish when particular security is oversold or overbought since these are the periods when stock prices change significantly.
• Momentum – day traders use this together with tick charts to show how active the stock price is and whether the activity is genuine or fake. If the price rises significantly, yet the momentum is the same, this indicates a warning sign. Stocks with positive momentum are ideal for long trades. You should avoid these if you wish to close your positions within a day.
• Volume indicators – these are used to confirm the correct entry and exit points for each trade. Large trading positions are often indicated using larger volume bars, while low positions with little volatility are displayed using small volume bars.

Candlestick Charts

Candlestick charts are used on almost every trading platform. These charts carry a lot of information about the stock market and stock prices. They help you to get information about the opening, closing, highest, and lowest stock prices on the market. The opening price is always indicated as the first bar on the left of the chart, and the closing price is on the far right of the chart. Besides these prices, the candlestick chart also contains the body and wick. These are the features that differentiate the candlestick for other day trading charts.

One great advantage of candlestick charts entails the use of different visual aspects when indicating the closing, opening, highest, and lowest stock prices. These charts compute stock prices across different time frames. Each chart consists of three segments:

• The upper shadow
• The body
• The lower shadow

The body of the chart is often red or green. Each candlestick is an illustration of time. The data in the candlestick represents the number of trades completed within the specified time. For instance, a 10-minute candlestick indicates 10 minutes of trading. Each candlestick has four points, and each point represents a price. The high point represents the highest stock price while low stands for the lowest price of a stock. When the closing price is lower than the opening price, the body of the candlestick will be red. When the closing price is higher, the body will be colored green.

There are several types of candlesticks that you can use in day trading. One is the Heikin-Ashi chart that helps you to filter any unwanted information from the chart data, ending up with a more accurate indication of the market trend. Novice day traders commonly use this chart because of how clear it displays information.

The Renko chart only displays the changes in time. It does not give you any volume or time information. When the price exceeds the highest or lowest points reached before, the chart displays it as a new brick. The brick is white when the price is going up and black when the price is declining.

Lastly, the Kagi chart is used when you want to follow the direction of the market quickly. When the price goes higher than previous prices, the chart displays a thick line. When the price starts to decline, the line reduces in thickness.

Each of the above charts works using a time frame, which is represented using the X-axis. This time frame always indicates the volume of information represented by the chart. Time frames can be in the form of standard time or the form of the number of trades completed within a specified period as well as the price range.

Charting Software

Each of the above charts is created and viewed using specific software. This can be found in a brokerage firm, although you may also purchase this online depending on the type you want to use.

The software helps you identify the right opportunities by indicating when and how you should start and close positions. They always display the necessary patterns required to estimate future changes in stock prices. Using stock patterns, you can also establish continuations as well as reversals in the stock prices.

Chart software is available in many forms. You may find those that are in the form of mobile apps or others that are web-based. Getting the right software enables you to generate correct charts. This explains why you also need to incorporate technical analysis into your trades.

Most day trading chart tools are available free of charge. Some have a forum where you can learn from experienced traders as you use them. They also come with demo accounts that enable you to master day trading techniques before investing your capital in the business.

Choosing Day Trading Charts

Before selecting any charts for your day trading engagements, you must consider several factors. These include:

1. Responsiveness – This refers to how quickly the chart can display information about the changing market features. This is the first and most important factor you should always check out for. Any delay in the way a chart displays data means that you will not receive vital information in real-time. You may end up acting on old information to make your decisions, and this can lead to significant losses on your part. Most charts may freeze or crash when your computer runs out of memory.

This explains why you need a fast processing machine for your day trading business. You want to ensure that the whole process remains as efficient as possible. When testing a chart for responsiveness, wait for a time when the stock market is busy. For instance, you may try using the chart during a critical financial announcement or news session. If the chart freezes at this point, then you will understand that it is not the best for your needs.

2. Cost – every trader wants to invest in tools that cost less to acquire and maintain. Years back, trading charts used to cost a fortune. This limited the number of traders that could engage in day trading. For instance, traders could buy market data from stock exchanges, and this would also cost a lot of money. Nowadays, all information required for any kind of trading is cheaply available. This means that charts should also not cost as much. There are several alternatives available on the market today for you to select from. As you do this, always have the price in mind.

3. Stability – a good chart is one that remains online and up to date all the time. For you to succeed as a day trader, you must remain on the market most of the time. If your chart keeps disconnecting from the stock market or fails to display market information on time, then it will make you incur more losses. You must, therefore, ensure that you remain connected to the market continuously. If you experience instability as a result of the chart software you are using, feel free to change it. If the instability is resulting from a poor internet connection, you may need to replace it too.

4. Type of Indicators – if you have ever engaged in day trading before, then you understand the importance of technical indicators. Having the right indicators plays a vital role in ensuring you predict the right price movements in the future. Indicators help you to save a lot of capital. They prevent you from making important investments and financial mistakes that may lead to losing your capital. You may create your indicators, or you may get charting software that has in-built indicators. If you decide to use your indicators, you must ensure that the charting tools you purchase can be used together with these indicators. If not, you might need to stick to those indicators supplied together with your charting software.

5. Compatibility with your computer – before settling for any charts, check whether it will work well with your current computer resources. This is an important factor as it will determine whether you will continue to use your old machine, or if you will have to purchase a new one. Some charts require a lot of RAM space. If your computer does not have this capability, you will end up adding more RAM. This translates to more yet unnecessary costs. When you are looking around for a chart, ensure that you check how much resources the charts will need. Most chart packages indicate the minimum requirements you need for the charts to work well. If this is not clearly stated, make sure you ask your provider about it so that you do not make a blind purchase.

6. User-friendly – a good chart should be easy to use, read, and interpret. A complicated chart will only make your trading days difficult. Get a chart that simplifies the work of interpreting data. Take your time and research on the available options then choose the best in terms of simplicity and layout. You may consider getting recommendations from other traders, although this does not necessarily mean that the said chart will work for you. Having a complicated chart can make you lose your confidence. You must, therefore, avoid it if you want to have smooth trading experience.

7. End-user support – once in a while, your chart software may experience a problem that needs technical assistance. As you continue using the software, questions may arise that need the attention of an expert. If the provider is not available to assist or respond to your questions, you may get stuck using the package. Before making a purchase, ensure that you find out the kind of technical support you will receive and how this will be done. Is it via live chat, email, or telephone contact? You can also go through some customer reviews just to understand if the service provider has a history of supporting its clients on technical matters. In case you need a highly responsive system, you may need to avoid those platforms that use the support ticket criteria. Companies that use this criterion to solve customer problems always take a long time to respond to even the most critical issues.

Charts play an essential role, and you can use time as well as ticked charts for successful day trading. Always remember that different tools are designed for different kinds of trades. You must understand the kind of tools you need as a day trader so that you do not struggle on the market.

Chapter 4: Money Management for Success

Money management mainly involves budgeting, saving, investing, and spending one’s money. Another way to explain it would be how an investor makes wise investment decisions with their funds and how they make plans around it. Making money is one thing, but knowing how to spend it wisely is what makes the whole difference. Some so many people would be able to lead a great life, only if they managed their finances well. Unfortunately, this is not something that comes automatically, but rather something that needs a lot of discipline and prior preparation.

In the investment industry, money management is a wide topic that comes with solutions to wise investments. In the financial market, consumers always have access to a wide range of investment opportunities. Still, depending on how they manage their funds, they might find themselves making wrong money moves. An investor’s main goal is always to increase their net worth; hence, they have to have great money management skills. Some would learn it themselves, while a few would always opt for financial advisors or money management apps that then manage their money for them.

Simple Ways to Manage Money

1. Put down a budget

This applies to both small amounts of money or even any planning involving a lot of money. Budgeting helps a lot in having control over what or how one spends their money. Many people do not work with budgets as they think it is a useless process. However, boring it is, budgeting gives you a clear picture of the amount of money you have and will help you limit yourself in spending on the wrong things. Budgeting also helps one not to get into debts or live beyond their means.

A simple way to budgeting:

• Set realistic goals: Be it in investments, saving, etc., always set goals that you can achieve. Once you have goals to achieve, it becomes easier to work towards achieving them.
• Identify your expenses: Since most people know how much they make or have, they rarely bother to look into their expenses. Track down your expenses to the last coin for a certain period. It can be a few weeks or months.
• Identify your needs vs. your wants: Know what you need and what you want, as in this difference is where the problem lies. Knowing what you can live without will always make a huge difference as you get to set clear priorities for yourself when it comes to money matters.
• Create your budget: Working with the needs, write down a budget breakdown for yourself, making sure you are not spending more than you make.

2. Stick to the budget

Once you have the budget created, it only makes sense if you can stick to it to the latter. It would be a waste of time not working alongside the created budget, as it is the guide to spending. Refer to it along the way as you get things done, ensuring that you are not going beyond the amount allocated to the specific areas.

3. Have a limited miscellaneous fund

This is very critical when working with budgets, as it allows you some wiggle room to spend outside the budget. This is what one can use for fun or entertainment, but it has to be up to a certain limit. With the limit, one can be able to know how far they can go with the spending. Without a limit, the chances of spending too much on mere wants and not needs are very high.

4. Track your spending

Small frequent purchase always adds up quickly. This happens without one’s knowledge, but before they know it, they have exhausted their finances. Tracking one’s expenses gives one room to see where they are spending too much on any unnecessary purchases. Other people spend out of habit, even when they do not need the items. Tracking this sets a way of controlling how one gets to use their money on the most important needs.

5. Go for the best prices

When making purchases, always make a lot of comparisons to go for the lowest and best prices. This can also be used in investment, where an investor with scout the market for affordable assets that are still great in value. Some highly-priced items are because of mere differences in packaging or branding. Always take advantage of discounts, coupons, or clearance sales that always have prices lowered. This helps in saving money.

6. Do long term planning for big purchases

Once you have tracked, the expenses are have started to make sense out of it, have a long-term plan for any big purchases. This means one can start by saving and putting away funds, even for investment. Rather than maybe taking a loan to invest, one can take a year to put away money for the same, and they would not feel the heavy impact on their money.

Planning this also helps an individual discipline themselves even more on where to spend and where to save.

7. Keep practicing

Once you have a clear picture of what works for you as an individual, keep practicing it to make it a habit. With time, you will be able to manage any amount of money and will know when to spend it or not. Even as an investor, you can be able to grow your portfolio by know when, when, and how to invest.

How Much to Invest for Trading

Money management is a big deal when it comes to business investments. Also, knowing how, when, and where to invest needs a lot of financial management knows how. In business, one must always know and be willing to take risks to grow their money. While it may be pretty simple, how one decides to go about this practice determines so much in the outcome.

Some successful investors planned and managed their funds and grew their way up to great success. This was done without taking on any loans. For this to be possible, one needs very high money management skills. On the other hand, these are those who thrive on sourcing for money or getting outside support for growth. This would also require good management skills as other people’s money is involved.

For business or investment to run well, there should be some simple money management procedures one can follow to be able to manage their funds comfortably:

1. Estimate the startup cost

Come up with a detailed list of what would be needed as a start. The kind of supplies and equipment needed for operating the investment or business. One way of doing this is to get financial advisors or to work with people who have gone before you, to give you an idea of what is expected.

2. Work on a working capital estimate

Before doing anything, figure out how much money you would need to keep the business or investment running. This is from utilities, salaries, if any, rent, etc. Come up with a list of items that you would need to take care of shortly. This is the time one can work with accountants or consultants who are more informed about such planning.

3. Have a six-month cushion

When setting up business operations, especially for a new company or investment, it is always advisable to have a six-month backup plan. This is because some businesses take a while to pick and be stable. Some can take even a year, which is why it is always said the first year in a business is the most crucial. When you have the cushion, one would not have to worry about sustaining it or lack of finances for the first few months. This helps in buffing the operations until when they are stab=le.

4. Add any forgotten or foreseen fees

When running a business, there are times when one can forget some small but very important tasks, which should constantly be in the management plan. These are always a requirement for smooth operation, as they are mandatory fees in any kind of business.

Risks to Avoid in Money Management

There are so many ways one can avoid making money mistakes, but there are a few basic ideas on how to go about it. So many business owners and investors learn through their mistakes, but it does not always have to be the case for everyone. Here are a few examples of how to make great money decisions as a beginner:

1. Not working with a financial plan

When working with any kind of funds, and with no tangible financial plan, it always ends up in a mess. This is one risk most people make and end up spending money haphazardly and without knowing it, have nothing to show for the spending. One always ends up going back to the drawing board once they realize they have incurred costs on so many things that they cannot account for. This is an area that needs a lot of caution, be it for businessmen, households, or even normal office setups.

1. Not measuring and having an idea where your money goes

Not knowing how much one is spending on a business or investment is very risky, as it leaves room for financial mistakes. Buying or having random expenses always leads to overspending, and one might end up prioritizing the wrong things. Always have a clear idea of what you need to spend on and have it written down, so you can stick to the plan to the latter. That way, you can be able to track and see where you spend most of your money, and how to cut down on some of the costs.

1. Borrowing money that one does not need

There are people who borrow money just for the sake of borrowing, or just because they have access to the funds. This is a very dangerous move because one always ends up spending money on wants and not needs. As much as one has access to money, it is advisable only to borrow money when with a clear plan of how the money is going to be spending, and how much returns will come out of it.

Also, only borrow money when your plan. It is ripe so that you do not end up having the money lying idle in your account hence tempting you to spend. Money always finds use, whether one had plans for it or not.

1. Not budgeting for non-monthly expenses (holidays, lunches, vacations)

Some people go on holidays without making any plans. They get into their investment fund; take a chunk of the money just to take a break. This is a very bad financial move as the funds should be put into great use to have a high return on any investment. A holiday or vacation is good but should be planned for in advance. This also helps in controlling the spending. Have a clear budget for the expenses, and then work out on a plan to achieve the budget, working with specific timelines.

1. Spending more than is needed

Impulse purchases are also a downfall to many when it comes to money management. When one spends too much or more than they are needed, it always becomes a habit, and money gets wasted. This is most common in day to day expenses where one buys small things that will end up accumulating and make a great expense. Always spend money on things that are a need and not nice to have.

1. Surviving on paycheck to paycheck

The majority of society falls into this category of poor money management. They survive on one paycheck to the other, and it would be disastrous if they lost their day jobs. Paychecks are great, but they are not the best when it comes to the high level of unemployment and the company’s cutting costs.

It is advisable to always have something on the side that one can use to boost their usual paycheck. This can be any kind of business whose money can be used for bigger investments. Also, with the paycheck, one still needs to use the money management tips shared to be sure they are utilizing it well to their growth and benefit.

Not having a plan around the managing of one’s monthly paycheck is risky, as it also makes one a slave to the employer.

1. Saving after spending

The most efficient way to save money is never saving after budgeting for everything else but rather saving first then plan for the remaining money. The mistakes people make is they do the reverse, and everyone knows how money issues are. One will always find a use for the money.

Expenses are always many in every setting of life, hence for one to be disciplined, they need to learn that saving is the most important aspect of budgeting, and that is should come first.

1. Not having an emergency fund

An emergency fund refers to money that you set aside to use when you need something fast. If you find yourself struggling with every issue that comes up in the road, then you need an emergency fund. Working with an emergency fund is similar to operating a business without any savings at all. The emergency fund protects you from any unexpected expenses that might come your way. Let us look at the reasons why you need an emergency fund as a day trader:

• You have been trading, and you have found yourself in debt. The emergency fund makes it possible for you to get out of debt and then cover anything that you might need to handle while running the business.
• You have just learned about budgeting, and you need to handle some expenses that come up. When you have an emergency fund, you will be able to add the expenses in the budget the way they come up. When you have an emergency fund, you can handle unexpected emergencies that come up in trading.
• If you are basing all your decisions and spending on just a single source of income, you need to have an emergency fund. The fund will help you in the cases when your trades aren’t going the right way, and you need to have them working the right way.
• Since you are a trader, you are self-employed. This means that you will not have the chance to ask for unemployment benefits at all. Instead, you will need to have a good emergency fund that will help you handle all your expenses so that you live well while waiting for trades to go through. Remember, as you place trades, you need to pay bills and do other things that will see you through the day.

Chapter 5: Mistakes to Avoid in Day Trading

Most emerging stock traders rush in the markets expecting to make a fantastic profit. Later they find out that consistently making money us to as easy as expected. For some, they get discouraged by this realization, and many people end up giving up on this. The hope if making money always attracts people in the trading world, but reality hits them when they lose the money.

There is a low barrier in the foreign exchange market; it’s the most accessible day trading market. It’s easy to start; you need a computer, an internet connection, and a few hundred dollars. However, this is not a 100% guarantee that you will make a profit. If all the risks and costs of day trading do not scare you, then you need to familiarize yourself with some common mistakes to avoid them for successful day trading. Before you take the plunge, please consider some common mistakes you should avoid as it’s the reasons as to why new traders fail:

• Less training and preparation- Be prepared when entering the market world. Not all traders try to get the training and the preparation before they get into the market. If you swim with sharks, you should first learn from sharks. There are books available with information about trading stocks. It is advisable to study as many of these books as possible. It takes time, commitment, and dedication to be successful. This is trading and not gambling.
• Being emotional in your decision- Most new traders consistently get losses because of having perceptions of money. Have a long-term focus on trading? It’s advisable checking your account monthly or yearly instead of on daily results. Luckily, you can reduce your emotional connection to money. Try small share size trading like 50 shares a trade. This way, you can be less nervous. This can also help minimize losses, less emotional distress caused by losing a large percentage of capital.
• Poor Recordkeeping- There are many reasons as to why traders are emotional when trading stocks. A trader may feel a lack they are losing control over what’s happening. To be able to control your emotions, it’s recommended you keep a trading diary. Enter all your trades, print a chart, and note down the reasons for trading. Is it technical, fundamental, or a tip? The benefits of doing this are to help you make money and also to become a better trader. You might make money on your first trial, but that doesn’t mean you won’t make money on your next trade. You will get better after each trade. You may lose money but learn from your mistakes. Managing money and record-keeping is essential than technical analysis.
• Lack of proper trading tools- Trading is like an art. It requires the proper tools and resources to do better work. You must have the proper tools to succeed in the stock market. Some of the tools might include educational resources, brokers, and trading software. Be equipped with these tools before you begin trading. Research and make sure that you are equipped with all the proper tools to be able to trade effectively.
• Going too big- There are similarities between a new trader and a gambler because both a casino and a stock market has a similar appeal — the opportunity to turn a small amount of money into a large sum of money. Preparation is the first step to succeed in the markets, and proper money management is the next step. Trading strategy has the same importance as money management, and it helps you protect your capital. It also softens the blow when you lose any trade. For example, if you trade using 10% of your capital. Even if you lose, this will not affect your account from that single trade. But if you trade too big, you stand a chance of adversely affecting your account with unnecessary risks. Don’t go all in even if you have a 90% win rate because you might lose everything. Manage your money correctly and never gamble.
• Learn but never follow- You will look for a mentor to be able to learn in this trading world. Learn about the success and failure of an experienced trader. Be self-sufficient. Learn from other people but never follow them.
• Anticipating Profits- Most new traders do not acknowledge that trade could go wrong. They start trading with the guaranteed expectation that they will make a massive profit without learning, and knowing everything about trading. Profit anticipation can be dangerous because you might end up losing all your money. It’s common for emerging traders to calculate spending on their newfound profit from the trade. Study the market and how much profit you will make. The best approach has a neutral attitude.
• Not Specializing- A lot of people start trading, thinking it is an easy way to make money. Here are different types of securities for trading; this includes stocks, commodities, options, futures, and currencies. For emerging traders, it seems overwhelming to learn all the information about the security type. It’s advisable to specialize. A new trader initially fails to specialize in a segment of a market, and they risk over-engaging in all emerging hot market segment. Specialize and stay dedicated and committed to a particular category to be successful in trading. Have an edge of being successful in trading.
• Wrong timing- A common for emerging traders to make mistakes. Even with a good idea, if a trader purchases the stock at an inconvenient price. A trader needs to learn that it might be wise to lock in a profit. Smart people trade earlier, and beginners trade later.
• Naively Following Mechanical Systems- Most traders use technology trading platforms that offer charting, support, and backtesting. This tool helps with strategies — computers assists in getting essential information about the technical and fundamental features of a stock. However, a lot of new traders make the mistake of depending on these tools before learning how they work. Thinking the computer can replace everything. And rely on the trading systems to do the trading for them. Learn about the trading signals, and don’t rely on the software to think for you. If you naively follow these mechanical systems to buy and sell, you will not learn anything.
• Ignorance of How to Short- Not knowing how to use short trading strategies effectively can cause less profitable trades. Most people think shorting as too many risks. By being ignorant of how shorting works can limit you from potential trading avenues of earning profits mostly in a declining market. It’s an essential rule of trading. Many people fail to learn about shorting in their lifetime due to fear, ignorance, or unlimited risk. However, you need to know when shorting. The stock market is a 2-way street, and by now knowing how to short, you will be missing part of the game. Shorting is suitable for short-term trading. For emerging traders interested in learning how to short, it’s advisable to find a stock with lower prospects and not more than 50 shares. You can learn strategies of shorting without having an excessive risk by minimizing the size of a trade.
• Placing Improper Stops- A lot of traders improperly place stop orders causing positions to be stopped early and losing more profit. The amount of money the trader loses depends on their risk tolerance. There is much incorrect advice on placing stops. The correct ways of doing this are to place stops according to the market like the support and resistance levels and not on profit goals. The market is not rea; y concerned about how much money you want to make. The market moves within a normal range. Analyze the stock behavior, or its standard deviation before placing a stop. By doing so, you will learn where the best stop placements are. You can get stopped out about 20% time by letting the stock show you where to place the stop. The definition of a Standard deviation is the higher and lower range of an average stock on a specific period. Each stock as a single standard deviation, they are all different as fingerprints. You can use Bollinger Bands to standard deviation, which also gives you losses and pricing projection. Using Bollinger Bands, stock pricing will be within the upper and lower ranges.
• Not Calculating Stock Risk-Reward Ratio- Before establishing a position, try and calculate the risk-reward ratio of stocks. This is a relationship between an investor’s desire to preserve money versus the desire to increase returns. Through experience, a trader will be able to determine the stock risk-reward profile. Here are it’s three components; Stock Price, Profit Objectives, and Stop Price. To be able to calculate the Profit Objective and the Stop Exit Price, it involves several factors like Standard Deviation or Technical Indicators. For example, look for trades that give you at least 2.5 times gains than losses. It’s different for each trader because of personal preferences and the trade used. Before risking a certain amount of money on a stock, be sure you can estimate the gains to be more than the risk before you make a trade. If not, move to the next stock.
• Crowded Trades- Most times, trades can be crowded, and this means that the traders have different information, and the stock is differently. Traders think the stock is going to sell off, but the stock keeps on increasing higher. It’s essential to know your time frame and other people’s time frame for the trade. Never be influenced by others, and if a stock keeps acting opposite of your expectations, then watch the size you trade and stay cautious. Always be prepared for surprises.
• Not Cutting Losses- Not cutting losses will hold you back and likely ruin your account. No one likes to make a loss, but this is an important part of the game. It’s a cost of doing business, and holding onto a lose will only bring you more unwanted risks. Know the amount of money you are comfortable risking a then go it’s a with it. Set the maximum amount that you are willing to lose, and if you pass beyond that range, you will have broken your trading rules. Learn how to be smart on cutting losses earlier, and you will have a stronger chance of succeeding.
• Vengeance Trading- The worse thing is to try to make up for a bad trade by adding more trades. By doing this, you are emotional, and that’s a recipe for disaster. Never trade to make up a lose. Only trade when you have a solid trading plan. This will help you refrain from making a poor trade that might hurt you financially in the long run.
• Averaging Down- Averaging down is one of the mistakes emerging traders do. The small loss can ruin your account. It’s a similar thing to most traders, a trader commits to trade, and they insist on following it through. This way of thinking is terrible and can cause you a lot of money trouble. You will be digging yourself into a deeper hole if you average down because you will be losing your position. Losing can be a devastating thing, but it is better to have a small loss than putting yourself in a situation where you might be kicked out of a trading game. There are always many trading chances, save up your capital. Then have an excellent trading plan and another good opportunity.

You will hear a lot about people who are victories on trading stocks, but you will hardly hear about their losses. This easily lures new traders to think that they will make fast and more profit when they start trading. To be a more successful trader, you need to study and get an edge that will help you make wise decisions. Understanding that making mistakes is part of the learning process and knowing how to reduce them, will enable you to be disciplined in your approach to trading.

Conclusion

Thank you for making it through to the end of Day Trading for Beginners: Let us hope it was informative and able to provide you with all of the tools you need to achieve your goals, whatever they may be.

Now you are aware that Day Trading is the process of purchasing and selling assets within the same day, often using borrowed funds to take advantage of small price shifts in highly liquid indexes or stocks.

Day traders use short-term trading strategies and a high level of leverage to take advantage of small price movements in highly liquid currencies or stocks. Experienced day traders have their finger on events that lead to short-term price movements, such as the news, corporate earnings, economic statistics, and interest rates, which are subject to market psychology and market expectations.

Day traders can use technical indicators to provide trading signals and assess the current trade

Managing your account and the risks associated with Day Trading involves the responsible handling of the available equity in your brokerage account. You can perform account management through further investment in profitable stocks, ingenious trade maneuverability, or exiting from trade deals that stagnate. On the other hand, your risk management strategies involve responding appropriately to alleviate prospective losses in an uncertain future and limiting the degree of your exposure to financial risks.

Technical analysis is the study of the price changes and trends of a stock or security. The study involves traders inspecting a stock’s trading history through technical indicators and charts to determine the future direction of the stock price.

Statistical trends, such as price movement and volume identified from the past, determine future trading opportunities. Technical analysts, therefore, focus on price fluctuations, trading signals, and analytical charting tools to examine the strength or weakness of a specific security.

Day Trading, like any other form of investment, is subject to influence from human emotion and psychological impact. Whenever money or capital is in play, people tend to take matters rather personally because of the inevitable consequence of the hope that comes along with the promise of significant returns.

After reading this book, your next step should be to practice what you have learned by signing up and becoming a Day trader. When you apply these tips, you will become an expert day trader much faster.

Finally, if you found this book useful in any way, a review on Amazon is always appreciated