Eight Day Trading Tips for Beginners

Eight Day Trading Tips for Beginners

Day trading is one of those career choices that works well for a certain type of person. A successful day trader is patient, trusts their gut instincts, does the research and is, above all, incredibly disciplined.

If you think day trading is for you, there are a few rules you need to follow to increase your chances of success. However, make no mistake about it: You will lose sometimes.

  1. Get the right software. The best day trading software is easy to use, which is important, because other than following the news, you're going to be using the trading platform, making trades over the course of the month. It's imperative that you feel comfortable with it and its many features. Many software applications include a mobile app, so you can act on a tip while you're out getting a latte. Further, day trading software offers different charts of the stocks you're trading or watching, which lets you analyze the movement of those companies and helps you decide whether you want in or out. The best day trading software includes forecasts and strategies, which gives you a starting point when you're new to the day trading game.
  2.  Set your own rules. This is where discipline comes in: You have to decide how much you're willing to lose before buying a stock. For each stock you're considering, set the price at which you'll buy and at which you'll sell. It's important to set a price where you cut your losses. This helps mitigate losses. It also ensures you make prudent investing decisions.
  3. Be patient. Although day trading is a fast-paced business that requires you to move quickly when you're buying or selling, you need to remain cool-headed and steadfast. If the market just isn't performing for the penny stocks you're watching, you may get antsy. Don't let it get to you. You can go a day or two without trading if there's nothing worth investing in. If you jump from trade to trade, however, you're more likely to lose money.
  4. Have a savings account. It's important to keep a level head and not invest all of your earnings into the stock market. Smart and successful day traders set aside money in savings accounts, long-term investments and retirement plans. Only risk the money you can safely afford to lose when day trading.
  5. Research as much as possible. You need to know as much as you possibly can about a stock you plan to invest in. Start searching your market scanner early – about an hour before the market opens for the day. Find the stocks that are trading at a high volume, and then check their average over the past month or so. By doing your research, you can uncover patterns in a stock's performance and determine a solid strategy.
  6. Check your ego at the door. Despite what you've seen in popular movies about the stock market, you cannot let emotion rule your decisions. Although you take pride with every win, the odds are that you'll lose more often than you'll win. That's why you can't let your ego take over. Even if you thought you were right about a penny stock, you have to consider that you were wrong and not hold onto a stock longer than your pre-determined rule allows. Creating a stop-loss order is the best way to lessen the blow of a non-performing stock.
  7. Practice trades. If you're new to day trading, take advantage of demos. Learn a strategy and then apply it in a demo account without actually trading money. You won't make any profit with these practice trades, but you won't lose any either. Consider it training so that when you trade real dollars, you're ready to enter and exit at the right time.
  8. Have a good work-life balance. It's also important to unplug and take care of your mental health. Day trading can be a stressful career choice, so it's necessary to find balance so you don't burn out, and so you can weather the days when you lose more than you win.

Day trading isn't for everyone, so don't push it if you aren't cut out for it. You can take the same strategies you learn from trading penny stocks and apply them to long-term investments and still make decent profits.

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