Whether you’ve had an interest in exploring the world of day trading for quite a while now, or you’ve just recently discovered this unique way of buying and selling financial instruments, you’ll want to be well-equipped with not only the basics, but also with strategies to help you achieve your goals.
1. Day trading is like going to the gym
Like working out, day trading is a job that requires a full commitment. If you only work at day trading one or two days a week, you will not develop the rhythm and experience necessary to become a great day trader. About 92% of people who attempt day trading fail miserably.
You can look at this one of two ways. One, it’s obviously a tough nut to crack and most people who try will give up with a losing ledger.
Two, if you are one of the 8 percentile who are successful, there are a whole lot of other people out there willing to give you their money. Becoming a successful day trader is a process that includes a lot of education along with trial and error. As long as you are trading, you are learning, so go to work every day and minimize your risks until you find your groove.
2. Find a comfortable strategy
Although some traders wait for stock to hit their pre-set “stops,” other advisors say that if a stock starts to go south, get out immediately. There are as many day trading stock advice columns as there are stocks, so you need to feel comfortable with whatever strategy you employ and then stick with it! Markus Heitkoetter has developed a system of day trading over the last 11 years that works for him. He shares his tips and tricks through the main Rockwell Trading website.
3. Look for volatility and liquidity
An important concept when teaching day trading for beginners is that the two most important qualities in a stock are volatility and liquidity. Volatility is the risk and reward a particular stock offers. A highly volatile stock presents a wide range in price in the course of a day. Liquidity just means you can buy and sell at a reasonable price. Find a stock that offers both and jump in with both feet.
4. Control your emotions
Trades are business deals, pure and simple. One of the most important philosophies in day trading for beginners is to keep your emotions in check. This applies both to successful and non-successful trades. Don’t get two low when a trade doesn’t work out, and remember that a successful trade is not the time to start shopping for yachts. Keep an even keel during the good times and bad and spend some time to analyze your mistakes. Take a deep breath and make the necessary adjustments to do even better with the next trade.
5. Only bet what you can afford to lose
When looking at teaching day trading for beginners, it’s easy to see a lot of similarity to gambling. There is the anticipation of a big payday that comes with a certain amount of risk. There are never any guarantees you are going to win, so you’d best not dip into the spouse’s rainy day cookie jar unless you want your hand slapped.
Markus Heitkoetter, founder of Rockwell Trading, is the author of the book, The Simple Strategy – A Powerful Day Trading Strategy for Trading Futures, Stocks, ETFs and Forex, tells how he rose from a small day trader to become one of the top trading educators in the world. It’s a good source to keep your losses to a minimum while you learn how to day trade.