Wondering how to become a modern day trader in 2019? The following 10 tips will have you well on your way to success.
1. Know what is happening in the markets.
“Knowledge is power” is cheesy but true. You likely already know all the basic procedures and hacks, but you have to stay on top all of the latest trends, news, and events which have an impact on your business. A good daily or weekly review of the situation can make all the difference. Make a list of stock you want to deal in and keep up to date with what is happening with those companies.
2. Segment your funds
Every new trade requires a brand-new risk assessment. Always be aware of how much money you are willing to lose -and whether you can afford it. Have some surplus funds set aside for trading only, that you will not miss if the trade falls through and does not happen in the end. Stick to around 1 – 2% of your account per trade.
3. Devote yourself relentlessly
Day trading actually eats up the biggest part of your day, every day. If your time is limited, then you should give up on it in advance. You have to be able to track all the markets, recognize opportunities and grab them before any other trader does. Speed is your biggest weapon, and for that you need to be present and attentive.
4. Start small and grow into the trader you dream of being.
Remember, there is nothing wrong with starting small. In the beginning of your venture, stick to one, maximum to stocks per session. That makes it a whole lot easier to track the market and stay on top of your opportunities. Also consider going for some fractional shares, to keep your operation more manageable and sustainable.
5. Penny stocks are not your friends.
Everybody loves a good low-price deal, but seriously, give these ones a wide berth. Penny stocks tend to be illiquid and you basically have no chance of scoring it big. Check out this useful article on what it means when an aspect of the trading world is called illiquid.
6. Time your trades.
One key reason for the volatility of the prices in the world of day trading is that a whopping number of orders that traders and investors place tend to get executed first thing in the morning, as soon as the market opens. So, with that in mind, start hunting for patterns. In the first fifteen to twenty minutes, make no moves at all and just read into the market. Observe the fluctuations in the opening and closing rush hours and see what flies best.
7. Explore using different orders.
When entering and exiting trades, you have two types of orders to choose from, basically: the market orders and the limit orders. They are essentially polar opposites. A market order will execute at the best available price at the time, so you have a guaranteed execution, but the price is a total gamble. A limit order guarantees a price, but not an execution. They are more precise in terms of buying and selling prices but make no promises as to whether anyone will consent to your prices. To read more about the differences between market orders and limit orders, and get some tips on when to use which one, check out this web page: https://www.nerdwallet.com/blog/investing/market-order-vs-limit-order-which-to-choose/
8. Stay realistic.
Being profitable does not mean winning all offers all the time; in fact, most day traders only manage to nab 50% or 60% of their trades overall. The goal is to turn a profit, not collect achievements. So long as you earn more than you lose, you will be fine. Be specific about your requests and your acceptable risks.
9. Keep your cool.
The stock market is a boot camp for the nerves. Hope, fear, greed, and rage need to be kept on a tight leash, otherwise you will ruin your own business. Listen to your head and leave the heart and the earnings trackers at home.
10. Stick to your strategy.
Finally, earlier it was suggested to always move fast, but never think fast. If you find yourself in an improvised situation, it means you are a lousy strategist. Rather than chase profits wherever you catch a sight of them, come up with a long-term formula and stick to it throughout. Plan your trade; trade your plan.