There are lots of opportunities to potentially make money by buying and selling stocks on a daily basis but you might be someone who has not entered the world of day trading yet because you are not sure how to apply the right principles and procedures to improve your chances of success.
Learning how to day trade for a living does not require a specific set of skills and you don’t have to be an experienced investor either. If you can learn the basic principles, you can soon develop the confidence to put your knowledge to good use in the markets.
Take it seriously
One of the most important aspects of day trading that you need to appreciate is that you are only likely to make a profit if you take the task seriously and do your research.
If you treat the task of picking stocks as more a job than a hobby, that level of professionalism will serve you well.
Set yourself some clear objectives and keep your emotions in check if you want to make good decisions that offer you the best prospect of making a profit.
You may be excited about the prospect of trading a number of opportunities but it often pays to start small and build up your stakes in line with your experience.
A good starting point would be to focus on just a handful of stocks in each trading session and once you have got the hang of things and identified angles that work for you there is always the chance to increase your trading activity.
Another point worth remembering is that it is now possible to trade fractional shares. This means that you could invest in larger value stocks by buying a percentage of one share, allowing you to keep your financial exposure to a minimum.
Understand the consequences of illiquidity
If you want to sell a stock you hold you need to find a buyer willing to buy, and that can often be an issue if you trade in so-called penny stocks.
Low-value stocks offer the promise of big gains from a low base, but many of these stocks fail to deliver and the problem is that they are usually illiquid, which means trying to sell them could be a very difficult task.
Get your timing right
Novice investors tend to leave orders to execute a trade as soon as the market opens, however, that is often a time when price volatility can work against you.
Learn to be patient and time the execution of your trades when the volatility has subsided, you can often do this by looking for patterns when profit opportunities are more likely.
Learn when to cut your losses
Not every trade will work in your favor and that is why you need to be disciplined by using limit orders.
You can use limit orders for buying as well as selling and it gives you a greater degree of control over the price you are willing to pay for a stock or sell it for.
If you apply these basic principles on a daily basis it should make quite a difference to how well you do as a day trader.