Have you decided to give day trading a try? We have useful day trading tips for beginners. If you are interested in Contract for Differences (CFD) trading, here are some tips on how to make money from CFD trading.
So what is day trading? Day trading means buying and selling stocks within a day. The profit is not that big but it piles up over time. Internet and online platforms made this type of trading easier, but also more approachable to all people who are interested in trading.
But, in order to play the game of day trading, you have to understand the rules and be committed to it. You can’t expect to invest a couple of minutes a day and be successful. Those people who are extremely successful in day trading treat it like a full-time job, they take it seriously and do a lot of research.
Day trading relies on the market fluctuations and those stocks that bounce up and down a lot. You can make some money if you estimate the right time to invest. So it is not unusual for one stock to be traded multiple times a day, depending on the situation.
Day trading tips for beginners
As we mentioned, day trading is for those diligent and focused people who are ready to invest time and effort into trading. If you just rush into day trading, investing without the proper research or good strategy, you will certainly lose money. So, if you want to be successful at day trading, keep in mind the following.
1. Start small
For a start, take one or two stocks, to begin with. When you are a beginner, you will certainly make mistakes. And it is better to make mistakes when you invest a little than go all in and lose everything. So, making mistakes will teach you valuable lessons which you can practice further into day trading. What is great about today’s market is that you are now able to trade so-called fractional shares. It means that you don’t even have to buy a whole share, you can buy and trade a fraction of a share, which is a great choice for beginners.
2. Set aside a certain amount of money
Or in other words, trade only with the money you can afford to lose. You certainly don’t want to use the money intended for the mortgage, rent, or loan repayment. Trading is a risky game, so you don’t want to lose the amount which will push you into debt or bankruptcy.
You have to assess how much money you can set aside for trading. Besides money, you need to set aside time, as well. You can’t do day trading quickly, you have to invest time in it if you want to be successful.
If you become successful at day trading, bear in mind that you should not quit your day job right away. If you are on the roll right now, and you are earning money, it doesn’t mean it will be like that all the time. If you are a beginner, maybe give it a little more time to see how do you do at day trading in the long run, before you do something drastic like quitting your job.
3. Time the trades
When the markets open in the morning, they are more volatile. At that time, those experienced traders are able to read the market properly and invest at the right time. But, on the other hand, beginners might not be able to do that. So beginners should always check out the market, but not make any moves for at least 20 minutes. The same goes for the closing time. Yes, these rush hours in the morning, until noon, and one hour before the closing bell may offer more opportunities, but they are risky for beginners. The perfect time would be the middle hours since they are less volatile.
4. Prepare the strategy and do the research
Everyone who plans on day trading should educate themselves about the day trading basics, how does it work, and what to pay attention to. Read all about the market and companies whose stocks you plan to buy. Once you get all the info about day trading, you can choose one of the strategies you like the most. Then when you choose a strategy and make a plan, stick to it. Don’t let your emotions take over when you trade because it will lead to decisions made out of panic. Always be reasonable and stay cool.