Obviously, this is a dangerous game for those who are not familiar with trading at all, let alone trading with a financial instrument like the Bitcoin. The fact that this game has been played since the inception of Bitcoin makes it even more dangerous.
Obviously, day trading isn’t for everyone.
However, there are a few trades that have turned out well, but most of them have been utter failures.
Let’s start with a brief explanation of the terms used in day trading, and then we will proceed to explain the basic concepts of day trading. We will also give you some trading rules and the most important tools you need to become a successful day trader.
The term day trading is a bit of a misnomer, because most day traders are not actually trading a single asset, but rather trading a collection of them. The term is used to describe a type of investment that trades many different assets at the same time, all within the same day. This may include stocks, futures, forex, ETFs, etc.
In order to be a successful day trader, you must have the ability to identify good trading opportunities, be able to execute a trade, and have the discipline to follow through on your trades.
Day trading is usually described as a “high-risk, high-reward” investment.
General Principles in Day Trading
Day trading is all about knowing what to do when. This means that day trading is an active process of monitoring your trading account, looking for opportunities, and making decisions about how to act on those opportunities.
This active monitoring is done by studying charts and patterns, as well as watching the market. In other words, you’re trading not only by the hour but also by the minute.
If you’re a day trader, you should expect to have a relatively small balance in your trading account, so you need to make sure that your risk is within reasonable limits. If you’re trading the market with a significant amount of capital, you may be able to ride out a bad day or even a bad week, but if you’re trading with a small balance, your losses can be significant.
Knowledge is important in Day trading success
Obviously, this is more important for swing traders, as they are constantly adjusting their trades to the market’s volatility. Day traders must be prepared to quickly react to the news that may affect the stock market, such as economic reports or announcements, earnings reports, corporate events, political events, and the like. Day traders need to stay on top of the news that may affect the stock market, and be ready to take advantage of any opportunities that arise.
In addition to knowledge of basic trading procedures, day traders need to keep up on the latest stock market news and events that affect stocks.
Risk the amount you can afford to loose
Because of this, you may be able to risk a greater percentage of your account on a trade. For example, if you set aside a $20,000 surplus account, you can risk up to 5% of your capital on each trade (5% x $20,000 = $10,000).
Set up a separate account to be used for trading. This can be a separate checking account or a separate brokerage account. Don’t use the same account for both trading and your regular banking. If you are using a brokerage account, it is a good idea to have a minimum balance in the account. If you do not, you will not be able to trade.
Some day traders use an “if-it-bleeds-it-leads” trading system. They set up a stop loss order, but only enter a trade when the market is moving against them. This way, they don’t have to worry about being stopped out of their position, and they only risk the amount they can afford to lose.
Be aware of the costs of trading. This includes commissions, brokerage fees, and account minimums.
Saving time
A day trader needs to trade all the time, 24 hours a day. If you’re working in the same office, you might be able to trade at night and sleep during the day, but it’s still very hard.
If you’re a full-time trader, it’s a matter of choice. If you have a day job, you’ll have to set your own schedule and trade when you have the time.
Trading is a 24/7 job. You’ll need to set aside a chunk of time to trade. You can do it in the morning or in the evening. It doesn’t matter, but you need to find the time to do it.
Focus on few amount stocks as a beginner
Evidently, the cost of investing in a large number of stocks is high, and it is better to focus on fewer stocks. If you have time and resources, it is advisable to invest in a few hundred stocks.
You should not invest in a stock that you do not understand. The more you know about a stock, the more comfortable you will be with the stock and its potential. This will make you more likely to buy and sell the stock at the right time.
You should not be swayed by a stock’s short-term performance. If you have confidence in the company and its future prospects, it is okay to be patient and wait for the stock to go up in the future.
* Think about how much you are willing to lose on any single trade. If you lose money on a trade, it is best to exit the trade quickly. Do not stay in a trade that is losing money. This will make you lose money in the long run.
Have a plan and follow it
As it has been noted, most of the people who day trade are day traders who’ve failed. It is important to understand that day trading is not for everyone. It is not for the faint of heart, nor is it for the lazy. If you’re the type of person who is looking for a way to make money in a hurry, but you don’t have the time to devote to learning how to trade, you may be better off looking for a more suitable method.
One of the main reasons day trading is so difficult is that you have to plan out your trading. You have to plan your trading day, week, month, year, and decade. You have to plan your entry, your exit, your strategy, your rules, your emotions, and your luck. Day trading requires a lot of discipline, a lot of focus, and a lot of mental strength.