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Today's trade is a buying and selling financial instrument in the same day or even several times during a day. Taking advantage of small price movements can be a favorable game - if played correctly. But it can be a dangerous game for beginners or anyone who does not obey the strategies considered carefully.
Not all brokers are suitable for trading volumes made by daily traders. But some brokers are designed with traders of the day in mind. You can check our best broker list for trading days to see which brokers most accommodate those who want to trade the day.
Online brokers on our list, loyalty and interactive brokers, have a professional or advanced version of their platform featuring real-time streaming quotes, advanced chart tools, and the ability to enter and modify complex orders in sequence.
Below, we will see some general trading principles of public days and then switch to decide when to buy and sell, ordinary day trading strategies, graphics and basic patterns, and how to limit losses.
Day trading strategy
1. Knowledge is strength
In addition to knowledge of basic trade procedures, traders need to maintain the latest news and stock market events that affect the Fed's interest rates, economic outlook, etc.
Likewise your homework. Make a list of wishes that you want to trade and keep information about the selected company and the public market. Scan business news and visit a reliable financial website.
2. Set aside funds
The value of how much capital you are willing is risky in every trade. Many successful day traders are at risk of less than 1% to 2% of their account per trade. If you have a $ 40,000 trade account and willing to risk 0.5% of your capital in each trade, the maximum loss per trade is $ 200 (0.5% * $ 40,000).
Set aside the amount of surplus of funds that you can trade and you are ready to lose. Remember, it's possible or maybe it doesn't happen.
3. Set aside time, too
Trade day requires your time. That's why it's called daily trade. You have to hand over most of your day, in fact. Don't take it if you have limited time to reserve.
This process requires traders to track markets and spot opportunities, which can appear at any time during trade hours. Fast moving is the key.
4. Start small
As a beginner, focus on a maximum of one to two shares during the session. Tracking and finding an easier opportunity with only a few shares. Recently, it became increasingly common to be able to trade fractional shares, so you can determine the specific amount, the smaller number of dollars you want to invest.
That means if Apple shares are traded at $ 250 and you just want to buy $ 50, many brokers will now let you buy one fifth of a part.
5. Avoid Penny Stocks
You might look for offers and cheap prices but stay away from Penny Stocks. This stock is often not liquid, and the opportunity to hit the jackpot is often gloomy.
Many stocks traded under $ 5 per share to be de-defited from the main stock market and can only be traded over-the-counter (OTC). Unless you see a real opportunity and have done your research, stay clear from this.
6. Trade time
Many orders placed by investors and traders began to be executed as soon as the market is open in the morning, which contributes to price volatility. An experienced player might be able to recognize the pattern and choose appropriately to benefit. But for beginners, it might be better just to read the market without moving for 15 to 20 minutes first.
Middle hours are usually less fluctuating, and then the movement starts taking back to the closing bell. Even though rush hour offers opportunities, it is safer for beginners to avoid it at first.
7. Cut losses with order limits
Determine what type of order you will use to enter and get out of the trade. Will you use market orders or order limits? When you place a market order, it was executed at the best prices available at that time - thus, there was no guarantee of price.
Day trade is difficult to master. This requires time, skills, and discipline. Many of them try it fail, but the techniques and guidelines described above can help you create a favorable strategy. With sufficient practices and consistent performance evaluation, you can greatly increase your chances of defeating opportunities.
