How to Day Trade the Stock Market – Tips For Beginners
When people want to learn how to day trade the stock market they generally think of loads of charts, technical analysis. You can learn many different ways and techniques to day trade the stock market but general concept is get in and out quick. The average trade may last anywhere from a few seconds to minutes. Occasionally a day trader will have a trade that lasts for hours but this is quite rare.
How do you know when and what to trade?
There is no simple answer but I think that having a water tight trading plan and strong mental toughness are two of the main factors that separate the successful day trader from the unsuccessful. If you want to learn how to day trade the stock market you simply must take the mental ‘mindset’ side very seriously.
Do you need to have 5 computer screens on all day long?
There are a few different ways that you can approach day trading. Do you need 5 computer screens? Absolutely not but you will need to do some work and research. Alternatively you can use a full service broker and let them do all of the work. They will normally call you when they have a suitable trade lined up. Is this really day trading? No. I would call this investing. Personally I think day trading suits the type of person who is willing to put in an hour per day on average. If this is too much of a commitment then there are plenty of trading strategies that you can implement without putting in that much time. There are strategies that can earn you 2-8% per month with very little risk. If this sounds more like your investment style then I would focus on some more long term strategies.
Is day trading risky?
Yes, like all all investing there are elements of risk. In fact day trading would be considered one of the more risky investment styles. The pure fact that within a few seconds your position can turn against you makes it risky. Whilst this is the case, in some ways day trading can be quite safe. If you have a proper trading system in place and set your stop losses before you place the trade then at least you know what the maximum you can lose is each trade. If you compare this to a long term investor they often let their trades run and run even though they have lost more than 50%.
“Trading is knowing when you are going to get out before you get in”
If you have a limited amount of capital to invest day trading can be a great option because you can get some big leverage. Of course leverage is a double edged sword and if used incorrectly without the proper systems in place it can be very dangerous.
What is the most important thing to know when you are learning how to day trade the stock market?
Quite simply you need to have a set of rules that you always follow. You do not want to be persuaded by your emotions. Back test a system, paper trade a system and then start trading with a small bank roll. Even if you only have a few hundred dollars on a trade you will get used the feeling of good and bad trades. Most importantly keep learning, increasing your knowledge and keep practicing. Even professional traders had losses when they started but importantly they didn’t give up.