5 Best Day Trading Strategies for Rookies

Many people want to pursue their careers as a day traders. But it’s not an easy job and you must have a skillset along with effective strategies. Day trading strategies are imperative when you are seeking to capitalize on frequent, small price movements. A steady and effective strategy depends on a detailed technical analysis, utilizing charts, indicators, and patterns to foretell future price movements. Day trading involves purchasing and selling a financial instrument in the same day or even multiple times over the course of 24 hours. Taking benefit of small price moves can be a profitable game, however, if played with an appropriate strategy. Therefore, in this article, we’re going to mention the 5 best day trading strategies for all those who want to earn a good profit.

5 Best Day Trading Strategies for Traders

1) Risk Assessment:

Being a day trader, you should always assess how much capital you wish to risk on every trade you made each day. The majority of the successful day traders risk less than 3% of their accounts on each trade. For example, if you own a $40,000 trading account and want to risk 0.5% of your capital on each trade, then your maximum loss per trade would be just $200.

2) Timing matters:

The orders placed by investors and traders start as soon as the markets open in the morning. Therefore. it adds up to the price volatility. An expert day trade should recognize patterns and pick appropriately to earn profits. However, for beginners, it would be better just to scrutinize the market without taking any step for the first 15 to 20 minutes. On the other hand, middle hours are comparatively less volatile, and it again becomes volatile during the closing hours. Although the rush hours provide opportunities, it would be safer for rookies to avoid them.

3) Must be Realistic Regarding the Profits:

One thing a beginner must always remember is that a good strategy doesn’t have to be fully profitable all the time. A number of traders only win 50% to 60% of their trades sometimes. Still, they make more on their winners than they lose on their failures. In addition to that, you must also make sure the risk on every trade is limited to a particular percentage of the account and that entry and exit techniques are clearly defined and jotted down.

4) Always stick to your strategy:

Successful day traders have to move really rapidly but they don’t have to brainstorm fast. You must be wondering, why? Well, they’ve learned a trading strategy in advance, in addition to the discipline to stick to that strategy. So, it is significant to follow your strategy closely instead of chasing profits. Consequently. never allow your emotions get the best of you and make you reject your effective strategy. There’s a popular mantra among day traders:

Plan your trade and trade your plan.

5) Research is Vital:

Along with the knowledge of basic trading procedures, day traders have to keep up with the latest news related to the stock market and events that influence the stock. It includes the rate plans, the economic outlook, etc. So you must do proper research. Afterward, make a wish list of stocks you’d want to trade and keep yourself acquainted with the selected companies and general markets. Scan business news and always access the financial websites.

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