10 Day Trading Strategies for Beginners
Day trading is both profitable and tricky at the same time. Buying and selling currencies within the same day, often multiple times during a day can be lucrative to forex traders. However, if you don’t get it right, you run the risk of losing much. If you are new to forex trading, it is better to do some groundwork and build some strategies before you jump right into day trading.
If you are looking for tips and strategies for day trading, you’ve come to the right place. Read on to find some information on how to go about buying and selling without losing your capital and more. What’s more, you’ll learn few day trading strategies, how to evaluate basic charts and patterns, and, more importantly, how to earn profits and limit losses.
Key Points to Remember
Day trading is not something to be taken lightly. A lot of hard work and research needs to go in if you wish to master it
Day trading is not a hobby – it is a job and so you should be diligent, focused, unbiased, and logical while trading
Don’t let your emotions decide your choices. That is a sure-shot way to lose more than you would gain from day trading.
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Some Day Trading Strategies to Put You Ahead
Knowledge is power
You should be well versed with the basic trading procedures, maintain up-to-date information on the latest forex market news and events, and watch out for big news. Always keep an eye out for interest rate plans, the economic outlook, and such important information. Also, track the currencies you wish to deal with quite closely. Gather as much information as you can.
Put aside funds
It is important to know how much you can afford to lose if things go wrong. Never put all your capital into the market in the hope of returning a profit. The general rule is never to risk more than 1% to 2% of your account per trade.
That way you are sure to limit your losses, if any, to the minimum. Likewise, you must keep some funds aside that you can afford to lose if things go wrong. Never use any money that you can’t afford to lose to trade.
Day trading isn’t easy. It requires your time – in fact, it takes up most of your day. You should be prepared to invest the time for trading. A typical day might need you to track the markets and spot the opportunities during any time of the day. Timing is the key. If you can’t spare the time, don’t get into day trading.
You should always start small. Choose one or two currencies and stick to them. It will be easier for you to track them and spot the opportunities. It is possible to trade with nano accounts and so you can use them to test the waters.
Avoid unstable currencies
It makes sense to trade in currencies which are stable and carry value. Too much volatility can make your investment a high risk venture and you might end up losing money. Unless you see a real opportunity that’s backed by thorough research and numbers, stick to the strong currencies.
Time your trades
The key to success in day trading is getting your timing correct. Many traders place orders as soon as the market opens thinking that’s the best choice. But, you should wait and try to get a sense of things at least for the first 30 minutes or so, before making a move. For a beginner, it is better to trade when things settle down a bit after the initial rush.
Use stop-loss orders
Stop-loss order is a handy tool in day trading. You can use it to get out of a trade if the price of the asset does not move in the expected direction. You must realize you were wrong and cut the losses at the earliest. As no trader can accurately predict the market performance stop-loss order can be a huge help in case things don’t go the way you hoped.
Be realistic about profits
Day trading is not always about making profits. There aren’t any strategies that guarantee you profits all the time. Even a 50% to 60% win of the trades is considered a success in day trading.
You must make sure the risk you enter on each trade is limited to a predetermined percentage of the account and no more. You should also clearly define the entry and exit methods.
Day trading market can be quite a whirlwind of action. There would be times when the events and market movements get on your nerves. But, you must learn to stay calm and think logically. Never enter a trade on whims and fancies or greed. Likewise, don’t let unnecessary fear keep you from an opportunity.
Follow your plan
You should have a trading plan and stick to it.
Day trading can be successful only if you move fast. However, that doesn’t mean you have to think on your feet. If you have a plan ready, and if it is backed by well thought out strategy, you will be able to think clearly and make the right decisions.
Don’t blindly imitate anyone else if they appear to be successful on the day. What works for another person need not work for you. Make the saying "plan your trade and trade your plan" your mantra for day trading success.
Day trading is not an easy art to master. However, if you put in time, skill, and discipline, it can be learned.
Many beginners who try day trading fails because they don’t give the tips and techniques mentioned above to create a strategy.
Most get into the market quite unprepared, expecting to make profits with a trade or two. But the market is not a magic land where you swish a wand and achieve the result you wish in day trading. Instead, it requires diligent practice and consistent performance evaluation, along with a lot of dedication to succeed in day trading.
When you put the above-mentioned tips into practice, you’ll be on your way to becoming a success at day trading.
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