The world of stock trading is a vast and complex one filled with technical jargon and claims about the best options that often contradict one another. If you are looking to get your head around the mysteries of stock trading and day trading in order to get into the stock market game, you will need to have a basic understanding of day trading.
Once you are solid on that, you can start to dive into the deeper areas of stock trading, with the support of a company such as Stansberry Research to help you ensure that you are making the best possible investments. Let us take a look at the basics of day trading; no matter what your question is, we will do our best to answer it for you below.
What is Day Trading?
Day Trading is a short term, small scale stock trading practice largely focused on foreign exchange (forex) and stock markets. This approach consists of buying and selling a security within the span of a single day, relying on the small price movements that often occur in stocks and currencies that are constantly in flux and are more liquid than others. In most cases, day traders have a large amount of investable capital and a very strong knowledge of the markets in question.
A good day trader is well attuned to the specific events that can cause markets to shift and change in the very short term. That means keeping a close eye on the news and being aware of any scheduled announcements that might change the shape of a financial market at a moment’s notice. That takes practice and experience but can be made easier with the support of an analysis firm to help interpret market movements.
If you are new to this field, then some of the simple strategies laid out below might be able to help you get started.
Day Trading Strategies for Beginners
The most important thing you can do to ensure success in day trading is research. Do your homework in detail, focusing on a few specific stocks that interest you. Keep as well informed as possible about the companies in question and the markets in which they operate. Knowledge is power in day trading, and a solid base of information will give you a major advantage over your competition.
You will also want to be cautious. Treat day trading like gambling, and don’t risk more than you are willing to lose. A good rule of thumb is not to risk any more than 1% to 2% of your total tradeable capital on each trade. Remember, even with the best of preparation, things might go wrong, and any money you put into a trade could be lost.
You are also going to need time. Day trading requires close, constant analysis of the markets and the ability to move incredibly quickly if an opportunity arises. You are going to need to set aside the entire trading day and watch the markets all day. A good opportunity could arise at any moment while the market is open, and you are going to need to be ready to seize that opportunity as soon as it appears.
When you are starting out, start small. One or two stocks per session is a good starting point, and in the modern world, there are many brokers that will allow you to purchase only a small part of a share in order to trade it if you only want to risk a little money at a time.
The other important thing to remember is to stay calm and cool at all times, even when the numbers are wildly flexible. Treat this like a job, and don’t get greedy. Base all of your trades on logic and thought, rather than emotion and greed.
Day trading is a great option when it comes to stock market management, as it doesn’t require all that much investment on a larger, longer-term scale. If you want to get started with stock market day trading, check out supportive research and advisory companies such as Stansberry Research, which can help you to make sure that you get the best possible return on all of your investments, bringing years of expertise and analysis to bear on your investment decisions every single time.
Interesting related article: “What is a Trader?”