Day Trading refers to market positions which are held only over a short period of time, typically the trader opens and closes a position the same day. Online stock trading is not that complicated once you learn a simple, rules-based strategy for anticipating market moves. Here are five secrets for day trading for beginners.
You should look for scenarios where supply and demand are drastically imbalance, and use these as your entry points. If supply is near depletion and there are still willing buyers, the price is about to go higher, as with anything in life. If there is excess supply and no buyers, the price will go down.
If you are buying a long position, you must decide in advance how much profit is acceptable as well as a stop-loss level if the trade turns against you. Then you should stick to your decisions. The reason for this is that this limits your potential loss and keeps you from being overly greedy if the price heightens to an untenable level. Although, in a strong market it is acceptable to set a new profit goal and stop-loss level once your initial target is achieved.
One of the most important lessons with online stock trading for beginners is to understand a proper risk-reward ratio. This allows you to “Loose small and win big” and come out ahead even if you have losses on many of your trades. Once you gain some online stock trading experience, you can even adjust your risk-reward ratios of as high as 5:1 or even higher may be feasible.
Contradictory speaking, successful day traders often do not trade every day. You may be in the market, on your computer but if you don’t see any opportunities that meet your criteria, you will not execute a trade that day. That is a lot better than going against your own best judgement out of an impatient desire to “just do something”. Plan your trades then trade your plan.
For beginner traders, EasyEquities has an option whereby you let professionals handle your Share Trading which is tailored to specific risk profiles, including aggressive, balanced, moderate and conservative.