Day trading can be challenging, but also very rewarding if you’re willing to put in the work that comes alongside researching stock picks. Beginners make the mistake of getting discouraged when they make poor trades instead of educating themselves to avoid those mistakes. If you’re just getting started with day trading and you want to get better overall at turning a profit for maximum gains instead of quick losses that lead to an early exit from trading, consider this handful of tips.
Planning Is Essential
Under no circumstances should you enter into any trade without a plan of action. You should know when you’re buying, not to mention when you’re selling, and the timeline for how long you’ll hold the stock. Trading emotionally or with no real plan of guidance is the fastest way for a beginner to lose money.
Manage Your Risk
Before you trade, you should always have a risk management strategy. Assess what you’re willing to lose and never trade more than that. Day traders who end up with massive losses never established a robust risk management plan.
As a day trader, you will be looking at the same stocks as thousands of other traders on the market. You need every advantage you can leverage to help you make a profit. Charting platforms like the Finviz screener can help you find potential picks while offering back testing strategies with historical data.Unfortunately, Finviz doesn’t have a mobile-friendly version available yet. Other stock screeners can help you while you’re trading on the go.
Always Adjust Your Strategy
As a beginning day trader, it can be tempting to ride the wave of success by executing the same strategy over and over. However, that’s how many day traders ultimately fail and lose money. Your strategy should be fluid and take any news into account. You should keep your ear to the ground for how the market is evolving and be ready to adjust your strategy at a moment’s notice.
Entry and Exit Rules Are A Must
Day traders stress over finding the perfect entry and exit point for their plays, but it’s impossible to find. Have a price range for both your entry and exit point and be willing to exercise discipline to stay within them. Day traders who deviate from their plans are more likely to lose money through emotional trading.
Don’t Focus on The Money
While day traders are investing money, the best traders can separate the value from the trade itself. Valuing the trade amount above all else is a prime way that day traders make mistakes. Stick to your strategy and focus on making money that way instead of letting emotions like fear and greed control your trades.
Hold Yourself Accountable
If the strategy you’re trying to employ is continually failing, you should be able to accept the blame and be willing to try something new. If you don’t take responsibility for your poor trades, you’re more likely to lose money in the future.