Day trading is an alluring career with potentially lucrative rewards. But success requires patience, diligence and discipline. Contrary to what you may have heard, day trading is actually safer rather than riskier because trading positions are processed in a single day. Still, you’ll need to know how to find opportunities and when to act on them.
Here are three tips for beginner day traders.
1. Practice Patience and Discipline
To succeed with day trading, you’ll need patience and discipline. It may be hard to believe, but successful day traders don’t necessarily trade every day. They’re certainly watching the market, but they won’t execute trades unless they spot an opportunity. This requires patience and the ability to put your emotions aside in favor of smart trades.
Successful day traders are also disciplined. They create trading plans, and they stick to it. Without a plan, you’re more likely to act on impulsive behavior, which may cause you to stay in a position for too long or bail too soon.
2. Make Sure You Have Everything You Need to Start Trading
Set yourself up for success by ensuring that you have everything you need to start trading. Here’s what you’ll need:
- Computer: Any desktop or laptop computer should work well for day trading. Be sure to check with your broker for minimum system requirements.
- Internet Access: A speedy Internet connection is critical. Time is of the essence when making day trades. Wired connections are best, as Wi-Fi can be spotty or slow. Delays in transactions can lead to unexpected losses.
- Trading Brokerage: You’ll need an online broker and a trading account. Do your research when choosing a brokerage to ensure they’re reputable. Also, make sure that their platform is user-friendly and you’re comfortable using it. Find out if they offer a mobile version so that you can check and adjust your positions if necessary while you’re out and about.
- Education and Skill: The more knowledge and experience you have, the better your chances of success. Both will take time and patience. In order to gain experience, you’ll need to make a few mistakes and learn from them.
3. Look for Supply and Demand Imbalances
Financial markets are no different from other markets: when supply is low and demand is high, prices will rise. If demand is low and there’s excess supply, prices will dip.
Knowing how to spot supply and demand imbalances on price charts will help you make smart trades.
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