Day trading used to be one of the hottest online money making trends on the internet, until a bunch of sleazy “gurus” started exaggerating claims and making up scams. Unfortunately, this has turned a lot of people away. And while you shouldn’t expect to make millions right away, you can make some good money day trading – so long as you know what you’re doing.
Discovering Day Trading Success
As you may or may not know, day trading is the practice of buying and selling stocks over a short period of time – typically just a few hours or days – in order to gain small profits and compound gains over time.
While a lot of people lose money day trading, those who take the time to learn how it works and put in the hard work can be incredibly successful. Beyond being a lucrative moneymaking opportunity, day trading also offers the benefits of flexibility and independence.
The challenge is that only a small number of day traders are successful. If you want to make good money and limit your risk, there are a number things you’ll need to do.
Here are a few of the top tips for success:
Learn a Trading System
You aren’t going to find success in day trading by following your gut and blindly buying and selling. You absolutely have to have a trading system.
“In order to find a trading system that fits, you may want to experiment with a variety of different trading systems to see which one makes the most sense to use,” NetPicks advises. “Needless to say, it really helps if you educate yourself about the financial markets. Having even a basic understanding of the mechanics of the market including drivers of the price, can actually help your trading results.”
Understand the Risks
Day trading comes with enormous risks. In most cases, you’re trying to jump on or off a stock that’s experiencing significant movement. This can be challenging and it’s easy to find yourself in a compromising situation.
Successful traders understand the risks they face and never put themselves in a situation where they could lose everything. In fact, it’s commonly recommended that day traders never risk more than 1 percent of their account value on a single trade. So, if you start with $10,000 in your account, this means you never put more than $100 into a single trade. This limits your gains, but it also prevents you from making any big mistakes. After all, the worst you can do is lose $100.
Practice Poise and Discipline
It’s easy to get emotional when day trading, but your long-term success will depend on your ability to practice poise and discipline in the midst of turbulent markets, steep losses, and even large gains. This is where having a trading system in place comes into play. When you follow a system and have preset rules and techniques, you’re far less likely to fall victim to emotional transactions.
Find a Mentor
You can learn a lot by consuming blog posts, podcasts, books, and articles, but there’s only so much technique you can absorb. Almost every successful day trader has done a good job of surrounding themselves with mentors who are able to coach them through the big picture concepts and finer details. You’ll need one, too.
Is Day Trading Right for You?
Day trading isn’t right for everyone. In fact, it’s only right for a small percentage of the population. Having said that, there’s the potential for massive gains if you take the time to do it right. What do you think – could you see day trading in your future?