Day trading is the buying, selling, and closing of positions within a single trading day. This type of trading will allow investors to earn money within just a few hours because they rely primarily on daily market fluctuations.
In most cases, a new trader would begin with day trading because it takes lesser time to reap profits.
As a day trader, you need to embrace different strategies that will allow you to be on top of your game as you watch various market fluctuations throughout the day and take advantage of them to earn profits.
Here are some of the most common strategies that day traders use:
Range trading. This strategy relies heavily on support and resistance levels determined in technical analysis. It will determine how a trader will play his cards based on the concentration of supply or demand.
Scalping. This strategy is used mainly by new traders who want to earn smaller profits from small price fluctuations throughout a trading day.
High-frequency trading. This strategy utilizes different algorithms that help determine short-term market inefficiencies that could lead to potential profits for a trader.
While there are no hard-and-fast rules in trading, here are some essential tips that you can use to get the best results:
Create a trading account. Whether new to day trading or not, you’ll need a trading account with a trading platform where you can store your money and manage your trades quickly. This account will keep everything in one place and help you get insider tips from other traders within the same community.
Set a budget. If you ask any seasoned trader, they’ll tell you that you should always allocate a specific budget for trading and not put everything on the line. Always remember to invest only the money you can afford to lose.
Keep your emotions intact. Prepare yourself for market changes that could potentially affect your emotions. Market movements are inevitable and usually happen several times in a 24-hour timeframe.
Watch the news release for the day. Big or high-impact news could mean the market movement is volatile during the news release. Avoid negative impact by either closing your trade early and getting out of the market for the day or preparing for the risk that may come your way.
Learn some technical trading skills. The technicalities of trading can be complex at first. Suppose you learn even the most basic techniques. In that case, you’ll be able to understand the technical aspects of day trading, such as setting your support and resistance levels, choosing a suitable timeframe for taking an entry position and finding the trend. Our mentors at VT Academy suggest finding the movement in the 4-hour and daily timeframes and finding your entry position in the hourly timeframe.
So much has changed over the last few years regarding day trading. With more and more financial institutions and online trading platforms giving opportunities to ordinary individuals to explore the world of trading, it is now becoming accessible to many people.
As a day trader, it’s good to learn a few important things first to familiarize yourself with the basics and go from there. Find people who can help and support you in this journey. After all, day trading can be an excellent option if you know how to do it right.
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