Have you ever wondered why some investors are more successful in their short term market play? Well, they likely engage in day trading of stocks. Yes, financial experts say that although stocks and equities are considered viable long-term investments, day trade can bring you ample opportunities when approached with the appropriate strategy.
Day trading has always been a lucrative market for stock transactions. For all trading enthusiasts, companies such as DayTrade Methods can serve as an appropriate platform to understand the various methods and their benefits. Trading based on company news and events is referred to as short-term trade and can prove to be profitable when done in the right way.
Why should you opt for day trade?
Day trade involves close tracking of the performing diurnal stocks. This is usually based on volume and its volatility that make the potent metrics for enabling buying or selling in any market. Not only is it easy to transact, but it is also one of the most dynamic markets that offer an electrifying experience. Technology has made it much more fascinating as you can move mountains in the market from the comfort of your home.
It is the accessibility and feasibility of speculating the volatility in the stopgap marketplace that makes day trade worthwhile. Timing plays a crucial role in this trading game. Not knowing when exactly to trade can lead to a bitter experience later.
To make the most of it, you could adopt a couple of strategies such as starting early in the day. For instance, catch up with the market updates as soon as it opens. That’s because as there’s an increase in the volume of transactions, it will only become fast-paced. Also, you will have some time in hand to do a quick survey and prep up to track the stocks you plan to play that day.
It’s always a good idea to keep your market interaction brief. There’s no doubt that trading all day brings more opportunities but experts say that transacting for just a couple of hours can get you the best returns. Just in case you wish to rely on the money-market for your living, active trading anywhere between 1-3 hours can prove to be profitable.
Tips on day trading
Once you are sure of what and when to trade, the next step would be to identify the risks involved in every transaction. A quick analysis of the risk along with assigning a cap on daily loss can keep things under control. Following it as a thumb rule will not only prevent you from losing more than you can afford but can also enable the maximization of potential profits.
Here’s an interesting discussion on how you can set target and limit loss at https://www.quora.com/How-do-I-set-the-target-and-stop-loss-in-intraday-trading
Initially focus on a couple of securities as this will be less time-consuming. Moreover, trading the same one or two securities for some time can make you a pro at it. The second important thing would be to understand the costs you are likely to incur, for instance, income tax, commission fee, etc. It would be wise to work out your strategies to manage it effectively.
If you are a beginner at trading, you might want to explore a plethora of resources to enhance your knowledge and sharpen your strategies. You can learn the art of culling maximum profits from short; thanks to the experienced traders reachable on various forums.
Reading up blogs, newsletters, scrolling through stock news, and websites or even reading books could help. If you want to hone your skills in this field, there’s no dearth of online courses, tutorials, or classroom programs that you can take. Once you have the basics on your fingertips, you can increase your knowledge of market analysis. With the help of advanced courses, you will be better placed when it comes to handling risks.
You can use a stock picking software to make the right stocks to trade on. Such versatile software can facilitate your intra-day trading goals by suggesting what would be the best stocks to start with. It keeps users updated with notifications via emails and messages on new trade opportunities.
If you’re trading in penny stocks, you might observe that in most cases they might just end the day where they started without much movement. This can make the volatility around it quite misleading making it difficult to profit from it.
Those who want to buy or sell penny stocks much watch its volume. Any sudden flow can cause a considerable price movement. However, the low trading volume or less liquidity can indicate that penny stocks aren’t a lucrative option for the day. If you’re new to penny stocks, follow this post for definitions and more.
The money-market is a busy place with millions of transactions taking place every minute. While this contributes to its uniqueness and dynamism, it adds on to its volatility as well. For instance, if you want to make the trading cost lesser, utilizing leverage could help but that again comes with an increased risk. If you are buying or selling in short, it would be advisable to look for patterns that indicate positive volume or adaptable volatility.
Brokers can also help you identify which ones to buy and which ones to sell-off. As you play the market, you’ll be able to develop your strategy of what works for you and what doesn’t. Make sure you use the right trading platform. Your aim of intra-day trading should be to maximize your returns and limit losses.