5 Proven Day Trading Strategies to Become a Successful Trader

Day trading is the practice of making short-term trades rather than the more common long-term ones. By buying and selling in less than a day, the trader attempts to capitalize on the behavior of the market in an attempt to turn a quick profit.

If you have heard the mythical success stories, it probably sounds too good to be true. Sit at a computer for a few hours make a couple of quick trades, and walk away thousands of dollars richer by the end of the day.

Well, to a degree, it is too good to be true free movie download .

If it was that simple, everyone would quit their jobs tomorrow and just take up day trading. That does not mean, however, that there is no money to be made in it. What separates a successful trader from a failed one is who can come up with better day trading strategies. 

Components of Successful Day Trading Strategies

The biggest mistake that novice traders make is assuming that it is easy. The reality is starker. Forbes writes that only about 10% of day traders are successful Pname Com Facebook Orca.  

So like any investment, day trading is a risk. However, there are ways for you to stack the odds in your favor.

1. Do Your Homework 

Many of the most successful day traders are seasoned traders who are experts in a given area.

As the new kid on the block, you probably won’t have the luxury of years of experience following the fluctuations of the markets. The only way to compensate for this is to be diligent in your research.

A good strategy is to draw up a list of stocks you would like to purchase and follow them. Keep informed of your intended target companies and how they react in different market environments.

2. Start Small

Another rookie mistake is going all-in too early.

Realistically, your first several trades will probably not be successful. That’s okay. It will probably take you a few months to a year to get over that initial learning curve.

Many brokers have recently started to allow trading in fractional shares. So if you want to buy into a company that’s selling at $200 a share, but you only wish to invest $50, many brokers will allow you to buy a quarter share.

Fractional shares are an excellent way for novice traders to get their feet wet. 

3. Avoid Cheap Stocks

By contrast, don’t waste your time on the bargain stocks.

People do sometimes hit a jackpot on the penny stocks, but that’s just it; they’re a gamble and a longshot at that.

More importantly to our purposes, a stock that drops below $5 a share tend to be delisted from the major exchanges, making them more difficult to sell quickly.

4. Stick to Your Day Trading Strategies

Don’t panic if it seems like you lose more often than you win.

Your system doesn’t need to be batting a thousand in order to be profitable. Most winning systems only win about 50% of the time.

They’re able to remain profitable because those traders trade cautiously and average more on their winners than their losers. If you find a system that is modestly but reliably profitable, don’t ruin by getting overambitious.

5. Above All, Take Calculated Risks

If day trading is often compared to gambling, it’s because a lot of the same rules apply.

Never trade with money that you can’t afford to lose. Set a limit each day where if you lose that much, you call it a day and try again tomorrow.

Successful day traders have to keep a cool head and not let emotion cloud their judgment. Let yourself lose too much on a bad trade, and you risk getting desperate to make up your losses. And when you get desperate, you make more mistakes, and the hole just gets deeper.

Create Your Own Luck

Hoping to get just get lucky trading stocks is courting disaster. But while making a reliable profit by day trading is difficult, it is worthwhile.

Through disciplined research and practice, you can come up with the right day trading strategies to tip the odds in your favor.

Check out some of our other articles for more tips on growing your wealth. 

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