Day trading stock online gives the thrill of the hunt from the convenience of an easy chair. While day trading can be intense and risky, it also holds potential for fast profits. The most successful day traders understand the process and are willing to commit the time necessary to monitor the markets for hours to catch the slightest favorable change. Day trading combines research and instinct with fearless action. If this sounds appealing, start with the 10 commandments for Day Trading Success.
1. Set limits on trading funds. Newcomers to day trading need to gain hands-on experience in the market. Since the potential for profit or loss is great, start with a reasonable limit of money that you can afford to lose without sacrificing the car payment.
2. Set limits on losses. Why ride a downturn hoping for a miracle upswing? As the old saying goes, know when to cut your loses.
3. Manage your expectations. Sure, day traders can hit the right time and double their money in a matter of minutes. They can lose just as fast. Day trading offers good profit making potential but does not come with a guarantee. Be satisfied with gradually increasing the value of your trades and avoid betting it all on one stock. Day trading is about risk taking not mindless gambling.
4. Determine a trading strategy. Day trading requires keeping up with trends and ranges but does so on a shorter timeline. Another useful approach is to focus on specific types of businesses or industries to develop expertise.
5. Trading is the means, not the end. Day trading is fast pace that occasionally needs to slow down. Trading repeatedly just to keep trading only makes money by generating fees for the online brokerage. Take your hand off the mouse and think before you click. Day traders might make 3 trades in a day or 12; it's not the number of trades but the result that counts.
6. Find the trends. Trend analysis shows changes that indicate an up or down move in stock prices. Since day trading is so active, you may choose to subscribe to trend reports rather than take time to develop charts.
7. Lose the emotion. The thrills and chills of day trading must be kept in check so that the buy/sell decisions are based on informed choices. If you lose, let it go. Dwelling on the loss only blunts decision making for the next trade. Put your emotions within a range, neither too high nor too low.
8. Block the fear. After tanking several times it's easy to start second-guessing your day trading decisions. Successful online traders have to rise above the fear of picking another loser and either work your trading strategy or make changes to improve it.
9. Ignore hype. No matter how much a stock is touted in the tip sheets, if it does not fit your day trading strategy then it's not right for you.
10. Look backward. Set a regular time to review past trades for profit or loss, application of trading strategy and information sources used. And be honest, was the trade based on tips, facts or emotion. You have to know what drives your day trading strategy to make it work for you.