Day trading involves the buying and purchasing of financial instruments in the same day or many times in the course of the day. Maximizing on small price moves can be beneficial when done correctly, but can also be dangerous for amateurs.
Not all brokers can manage the high-volume trades generated in a day, while some fit well with day traders. Having a trading checklist is an essential part of the trading procedure since it makes traders disciplined, stick to the plan, and improves confidence. Having a trading checklist gives traders different questions before executing trades.
Let us dive right into the top Stock trading strategies for beginners.
- Knowledge is Power
Day traders should keep up with the latest news in the stock market besides having knowledge on the day trading activities. This information can include the interest rate plans, financial news, and top indicator announcements.
Do enough research and create a stock list you would wish to trade and stay updated on the chosen organizations, their markets and stock. It will also help to scan business bookmarks and news to get the latest information.
- Set Funds Aside
Commit and asses to the amount of money you are willing to risk per trade. Most successful traders put stakes of less than 1% and 2% per trade. Day trading also needs time and you will be required to spare enough time to indulge in it. Please avoid getting into it; suppose you have minimal time to spare.
Day trading needs the trader to study the market and detect opportunities that come up anytime in trading hours. Staying updated and moving swiftly is important.
- Shun Penny Stocks
Beginners are probably looking for good deals with low prices but they are advised to avoid penny stocks. Penny stocks are mainly illiquid, and you will have minimal chances to hit the jackpot with them.
Most stocks trading below $5 get delisted from big exchanges and you can only trade them over-the-counter. Avoid these stocks unless you fine an ideal opportunity.
- Time the Trades
Most orders placed by traders and investigators start to materialize in the morning when the market opens, causing a price volatility. Seasoned players might recognize these patterns early, and they make huge profits from them. However, it is advisable for beginners to study the market without making any bug steps for the first thirty minutes.
Avoid middle hours because they are volatile and the movement starts to pick towards the closing bell.
- Avoid Losses with Limit Orders
Choose what type of you will utilize when entering and leaving trades. Will you use limit orders or market orders? Market orders are executed at the best pricing at that moment, and has no price guarantee. This order is essential when you want to spend less time in the market and are not concerned about being filled at a certain price.
Final Thoughts
The coding journey can be challenging for newbies, but as anything else, practice will hone your trading skills. The above article has discussed how to get started with your trading journey and some include setting funds aside and avoiding losses.