Beginner's Guide To Day Trading
A day trader is, in every sense of the word, a short term investor or a speculator. Most of the time, they trade on market momentum, disregarding the fundamentals of the stock they are buying or selling.
Their trades normally have a short lifespan, with almost all of his positions closed out by the end of the trading day. To get started with online day trading, here are the things that you should know.
Choosing an Online Broker.
Brokerage commission is not the only criterion in choosing an online broker. Make sure you choose one with a robust trading platform that can execute your trades promptly. Etrade.com and Scottrade are the premium brokers that offer super fast trade turnaround, and they have very attractive commission rates for hyperactive traders. But if you have to choose a low-cost broker, FirstTrade.com and AFTrader.com are the few low-cost brokers that offer decent trade turnaround.
Before starting any trade, it is essential to put in place a trading plan, and follow this plan religiously. A trading plan sets out different criteria and parameters which dictate how trading decisions should be made in all market conditions. With a trading plan, you will know whether to stop the loss and close out the trade, or
to ride out this volatile period.
Make it your habit to be disciplined. In day trading, the price of a volatile stock can fluctuate very fast. There will be times when the price will move against you. Cut losses when youre supposed to in accordance with your trading plan. By the same token, take profits when your trading plan dictates to. Also dont trade for the sake of trading. If there arent any good trading opportunities, stay out of the market!
Keep Your Emotions In Check
Never allow your emotions to rule your trading. Be disciplined, stick to your trading plan, and you will not get emotional during a trade. Trading decisions are often ruled by emotions for a trader who lacks discipline. This leads to bad decisions resulting in trading losses. Fear or greed is the two emotions that are detrimental to a day trader.
To summarize, always develop a trading plan or system, and constantly tweak the plan for optimal results until it works. Be disciplined and know when to cut losses and take profits. Last but not least, get emotions out of the way when you are trading.
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