Learn how to day trade online with our day trading for statues guide. There are six things every beginner should know before starting day trading stocks. Everything you need to know about day trading will be revealed through this day trading for beginners guide.
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In this day trading tutorial, we will give you six day trading tips that will teach you how to day trade. Day trading is a legitimate career that can give you freedom from your regular 9 to 5 job. We created today’s trading for statues guide so that you can avoid the most common mistakes new traders tend to make.
We’ll dive into the basics of day trading, plus more advanced strategies.
So you want to learn how to day trade?
Let’s start by answering the first basic question: What is day trading?
What is Day Trading?
Day trading is the act of buying and selling financial instruments in one trading day.
Whenever you open a trade with the intention of taking advantage of small intraday price fluctuations, and close the trade within the same trading day, you are engaging in day trading.
Easy enough, right?
The only thing you need to remember is that if you close your position before the market closes, you are a day trader.
For example: If you buy and sell Bitcoin in one trading day, you are day trading Bitcoin.
Many successful traders use day trading strategies as opposed to long term trading strategies. They are considered one of the best ways to get rich quick. But, we also need to remember the bad risks that come with day trading.
Deciding which trading style is better, day trading or long-term investing comes down to more than just your personal preference. There are several key factors, such as mental discipline, your ability to perform under pressure. It’s also important to remember that you can still fail if you don’t have the right approach.
You may be asking yourself, “should I day trade?” In the next section, we’ll cover the core traits you need to become a successful day trader.
Who Should Day Trade?
Wondering if you should day trade? The way to make a profit in any market (stocks, Forex, commodities, cryptocurrencies) is to find a trading style that suits your personality. Some people have a natural skill set that is better suited to day trading than others.
Being successful as a day trader requires more than just a good day trading strategy. You also need to have:
- Mental discipline.
- Quick thinking skills.
- Ability to work under tremendous pressure.
If your personality doesn’t match your trading style, you could end up in a risky situation. For example, if your trading style moves faster, you may not be suitable for day trading. You will be better suited to live trading. Basically, you need to understand the personality of your trading time frame.
Veteran trading psychologist and bestselling author Brett Steenbarger found that trading success means focusing on your personality strengths.
Another thing to remember is that today’s trading also has an ingredient of rules. FINRA only allows you to engage in trades if you have at least $25,000 in your account. This is also known as the PDT (Pattern Day Trading) rule.
So, have you tried day trading?
If you have more than $25,000 in your account and operate well under pressure, day trading is a good option. It depends on your trading personality, risk tolerance, and financial liquidity.
If you are lucky, you fill all the requirements outlined in this section. You are one step closer to making a career as a day trader. Now, you need to learn the right way to day trade. For those of you who don’t qualify or don’t want to risk your retirement or savings, you can use social trading platforms to copy professional day traders.
Why Day Trading? – Day Trading Benefits
So, what are the benefits of day trading?
- There is no overnight risk in holding stocks.
- You can make money when stock prices rise and when stock prices fall.
- You can use additional margin. The use of leverage and quick market entry and exit make day trading stocks alluring.
- You don’t need to do a detailed study of the company’s fundamentals. You are only speculating on day-to-day price fluctuations.
- You can make money quickly compared to long term trading.
These are just some of the advantages that day trading offers. This should motivate you why day trading is a good approach to trading in the financial markets. You may also be interested in our guide on day trading ETFs.
Next, we need to learn how to day trade stocks in a way that will give you consistency.
If you are interested in day trading for a living, this 3 step process will teach you how to trade stocks successfully.
How to Day Trade Stocks
Learning how to day trade involves more than just picking the best day trading stocks. It requires a system of planning, practice, and patience. Here are some basic principles you should follow when starting day trading.
Relying on the “Three P” Rule:
- Planning – You need to develop your own day trading plan, otherwise you are planning to fail. It is important to have a personal map for your trading because there are many storms that you can experience when trading.
- Practice – An important piece of your trading toolkit is to practice your strategy until you master the game of day trading. After all, repetition is the mother of all learning.
- Patience – Once you have your trading plan, be patient to follow your rules.
You need to know day trading, what time to trade, which stock trading day is best to deal with and which day trading strategy to use.
If you can master the art of patience and follow the rules of your day trading, it can be a real game changer for your trading.
If you really want to increase your success rate and further optimize your strategy, you need to know the best time to day trade.
When Are the Best Times to Day Trade?
So, what is the best time to day trade? The best time to day trade is during the first and last market trading hours, between 9:30 – 10:30 EST and 3:00 – 4:00 PM EST.
The stock market has a tendency to produce most of its price movements at certain times of the day.
It is well documented that the stock market is most volatile during the first hour of the trading day (9:30 – 10:30 EST) and the last hour of regular market trading (3:00 – 4:00 PM EST). This is often referred to by the pros as a power clock stock.
A day trading strategy cannot survive without volatility. Volatility is the life and breath of every successful day trader.
Now, you have the mindset of a calculated sniper ready to patiently wait for the best trading opportunity.
There is one more thing left for you to complete your education on day trading. If you want to take your game to the next level and approach day trading the right way, you need to learn how to day trade stocks using charts.
Day Trading Strategy – Action Patterns and Price Charts
Day trading strategies usually rely on two types of stock analysis: fundamental and technical analysis.
To find potential day trading opportunities, you need to focus on chart-based technical analysis. You only need to have one good price action pattern that repeats every day to be successful as a day trader.
Our team at Trading Strategy Trader has put together the most comprehensive guide to different day trading chart pattern strategies. To understand the psychology of chart patterns, please start here: Step-by-Step Chart Strategy Guide.
If your favorite stock tends to generate the same pattern over time, chances are the stock will continue to follow the same pattern it has done in the past. That’s why we recommend studying historical stock charts to find repeating patterns.
When you are looking for day trading patterns just look for clean and simple price action.
If you are having trouble determining whether or not there is a pattern on a stock chart, it is likely not a tradable stock pattern. You need to find predictable and reliable stock chart patterns to become a successful day trader.
For example, a breakout that occurs in the first hour of normal trading hours and is accompanied by an increase in volume, has a very high probability of seeing a follow-up. The best way to trade day breakouts is to wait almost above the resistance level. You also want to see a close below the support level before you sell the stock short.
See the stock chart below:
A day trading breakdown is a simple and clear pattern that takes advantage of the instability created by the breakout of this key level. This is a great way to learn how to day trade stocks and grow your account.
Also, be sure to read this article on the best day trading platforms.
Final Word – How was the Trading Day
Day trading requires intense focus. If you learn how to day trade correctly, you can achieve financial freedom. Once you create a profitable trading plan, you will be able to see recurring and profitable stock chart patterns. If you need help, you can achieve all of the above through our very popular trading resources and trading strategies on the TSG website.
Before you develop your day trading strategy, make sure you have every point covered through this article before you release any of your hard earned money. With the S&P 500 hitting lifetime highs almost every day, there’s never been a better time to start day trading stocks for a living.
Finally, we hope today’s trading for statues guide will get you started in the stock market.
Thank you for reading! Also, read our guide to day trading penny stocks.
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