It doesn’t require much capital, tools, or knowledge to get started as a day trader. In fact, if you’ve got a few thousand dollars in savings, have some simple software, and have the most basic understanding of how trading works, then you are ready to take the markets by storm.
Because of this low barrier of entry, many people enter the world of day trading completely unprepared. They think that overnight riches will simply pour into their bank account while they just sit back and relax, while maybe doing a an hour of “work” a day.
Unfortunately it doesn’t really work like this. Sure, day trading can be a rather simple business once you gain experience and start to understand what works and what doesn’t, but in the meantime you are going to have to be prepared to put in some serious hours.
In this article, we are going to take a closer look at some of the best day trading tips, that will help you reach your financial goals faster than you thought was possible.
1. Keep a written journal
You are going to learn from your day trading mistakes much quicker if you make it a habit to keep a written journal on a daily basis. It’s a good idea to make your journal as detailed and accurate as possible, almost as if it’s a snapshot of your entire thought process.
For example, include things such as the reason why you decided to make the trade, your profit target, your stop loss, what you would have changed if you were to make the trade again, how you felt during the trade, and ultimately why the trade was a success or failure.
Try to be as specific as possible and completely truthful, as doing this will make you into a better day trader…guaranteed!
2. Analyse more
In reality, the majority of day traders spend almost all of their time day trading, and very little of their time analysing the trades. The main reason for this is that they want action and excitement, and don’t want to bog themselves down in study and theory.
Successful day traders approach things a lot differently. In fact, it would not be far from the truth to suggest that they spend as much as 90% of their time analysing the markets looking for profitable trades.
The remaining 10% of their time is reserved for actual trading www.indov88.com. At the end of the day, trading is all about predicting what a stock will do, and you can only gain a real insight into this once you do your homework and gain real knowledge into the factors of what makes a stock go up or down.
3. Focus on losses, not wins
It might seem strange, but another day trading tip that many experts swear by, is to always focus on your losses and not your wins. What this means is that when your thought process becomes too focused on “how much can I gain?” it usually leads to you taking silly risks.
Understand that if you are following a proven day trading strategy over the long term, then profits will come naturally and consistently, which means you should be more concerned with limiting your losses.
This doesn’t mean that you have to become a fearful day trader, it simply means you are looking to protect your trades so you don’t end up breaking the bank.
4. Learn how to use charting software
There are some traders who don’t use day trading charting software, but not many!
Basically, charting software is a way for you to quickly analyse the current information about your market, so that you can identify trends and patterns.
Sure, you could get this information without the help of software, but it’s going to take a lot more of your time. Instead, it’s a much better option to learn how to read the different types of charting software now, so that in future you can get all of the day trading inside information within a few minutes.
There are lot’s of different charting software programs available for you to use, with some of the more popular options being Sierra Chart, Esignal and TradeMaven.
Best of all, the majority of programs come with a trial offer, which means you can take them for a test run before parting with your hard earned cash. Then, once you find the programs you feel most comfortable with, you can pay for them and then have access to day trading tools which will pay you many times over what you invest.
5. Using the “EPD” formula
Day trading can be volatile at the best of times, which means you need to be using the “EPD” formula to keep bringing in consistent profits, despite what is going on around you.
So just what is this formula? Well, it’s 3 traits that every successful day trader possesses, and if you want to follow in their footsteps, then you should make it a point to focus on all of these traits.
Quite simply, you must avoid day trading with high emotion. Things don’t always go your way, and getting emotional is something to be avoided whatever happens.
When you trade with emotion you make bad calls, which can only lead to losing money in the long term.
Day trading is all about patience. Sometimes it can take hours to find the right trades, and you must be prepared to stick it out and not get “trigger happy.”
Ultimately, there are a lot of shiny objects in the day trading world, and a trader without patience is going to end up distracted every few minutes. Don’t let this happen to you.
If you were just a normal investor, then you would have days and even weeks to make up your mind about where to invest your money. Unfortunately, you are not given this type of luxury in the day trading world.
Sure, a certain amount of analysis is needed in day trading, but once you have gotten enough information to make the trade, then it is all about making the decision. Failure to follow through will never get you anywhere.