Day trading offers everyone an opportunity to make significant profits from their investments in a very short period of time. And it is this feature that attracts numerous individuals to try it out. For someone who is considering venture into day trading, you must prepare to deal with the rapid changes in the markets, whether in stocks, commodities, bonds, and so on. This involves gaining knowledge and experience about trading techniques, practices, tools and behaviors.
- Join A Trading Chat Room
It is essential that you learn to think like a trader looking for quick buy and sell opportunities while sifting through multiple charts. And a good way to build up the mindset of a trader is through looking at and duplicating actions (and processes) of other successful traders. So, join in a trading chat room where other traders detail their exploits.
When you are constantly exposed to trading styles of other people, you will start developing an instinct for rapid buying and selling stocks. Check out Warrior Trading Review and see if their trading chat room suits your purpose.
- Consider The Risk-Reward Ratio
An important concept of trading is the risk-reward ratio. The ratio essentially tells you how much profit you can make on a trade, thereby giving a good idea whether to bet on a specific trade or not. A ratio of 2:1 means a potential of earning twice the amount you are investing with the risk of losing everything.
Experienced traders always look for trading opportunities with a risk-reward ratio of 3:1. And as a beginner, we also recommend that you only bet on trades where you stand to gain at least three times the investment. Once you gain enough experience, you can start betting on higher risk-reward ratios like 4:1, 5:1, and so on.
- Gain Experience Through Trading Simulators
Remember, you are only a beginner in day trading. As such, it is unwise to start betting lots without any experience of how the market works. This is why you should start by using a trading simulator.
This tool allows you to trade multiple market real-time using a dummy account. And without risking any money, you will gain experience in trading all kinds of instruments. If you sign up for Warrior Trading, you will get access to trading simulators which can be used to hone your trading skills.
- Set Your Trading Budget Wisely
You also need to decide on how much money you are willing to bet per trade. Most novices start betting 20% to 30% of their capital right from day one. This is a dangerous practice. You might end up losing all your trading capital in just a couple of hours.
Experienced traders often use only about 2% of their trading capital on any single trade. That means, if they have a capital of $10,000, they only bet about $200 on a trade. Some might take an extra risk and bet 5%. But that is the limit of what professional traders play with. You will also do well to stick within these limits when betting your capital on any initial trades.
These 4 trading tips, followed well, should be a good start to your trading journey. Remember to always learn from your mistakes and you should be making fewer as you go on trading.
Love Counting My Pennies?
Sign up to get our latest content by email.