Many people make a living day trading and so can you. If you choose to make an attempt at day trading for a living, you must take your trading seriously. Day trading is like owning a business, the work doesn’t begin and end with the market bell. You must put in time and effort.
Stock Trading is not easy, it takes a lot of hard work and long hours to become successful. You must study the stock market thoroughly as a whole, different sectors and various individual stocks. Even though your day trading and may be focused on one particular stock, you must understand the market as a whole and the individual sectors in order to be more accurate with your trades. You should also employ day trading strategies that work for you
You are looking at buying a stock after the market opens and selling it before the market closes. A day trader does not want to risk any changes overnight, a day trader is left with no risk when the markets day is done. You may own the stock for a minute or you may own it all day. It depends on how you want to play the market. Some traders like to scalp each trade for a dime or two, others like to have longer swings within a time period to make their trades while taking in larger gains.
The goal of day trading is to minimize risk and losses while maximizing gains. In order for this type of trading to be profitable you must have a lot of money at risk for each trade. This means take your gains when you get them. Don’t be greedy and look for a little more. It also means selling at a loss quickly in order to keep your losses to a minimum. If you are buying a stock, you are expecting it to go up from the second you purchase it. If it begins to drop in price you need to sell immediately. Every second you hesitate could cost you hundreds of dollars.
It is very important to know technical analysis from three minute charts through yearly charts. You should also have the fastest trading platform possible with all the different charts and tools. With all this information a trader can make a well informed decision. Knowing your stock, the stock market and technical analysis will increase your chances of being successful. In order to make a living day trading, you will need to make profit on the majority of your trades while only taking minimal losses on your mistakes. You will not be able to make money day trading if the majority of your trades are losses. This is also why its important to cut your losses quickly. Letting one mistake run longer than it should while you hope it stops is a bad idea and can be very costly.
If you decide to day trade stocks for a living, ensure you follow these simple rules. I find the toughest part is to sell for a loss when you feel very strongly that the stock will make a strong move up any minute. Not making that sell can you cost you a days or weeks profit. Don’t expect to make it right away and practice trading within the time frame of a day. You will be surprised at how stressful this is but if you can get it right, it also can be very rewarding.
Stocks which are traded for $5.00 or less than that per share over the counter (OTC) are known as penny stocks. People invest in these stocks because of their absolute low value. These are high risk investments.