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Dos and Don’ts for Day Traders

If you get your ideas about day trading from the movies, you’d think it is a glamorous, profitable, and easy way to get rich quickly. While that’s not impossible, it’s not as easy to succeed as a day trader as you might think–after all, if it was, everyone would do it. You can avoid some of the pitfalls and do other things right by following the tips below.

man holding a phone with a trading chart and a laptop with a chart

Do Organize Your Finances

The time to start day trading is not when you are on your last leg, financially speaking. In fact, in order to get started, you need to have a decent cushion and some money that you can afford to lose. That’s not because day trading is a losing proposition but because high reward also means high risk, and you’re going to lose some as well as win some. Look for ways to tighten up your budget, and consider paying off high interest debts with a lower-interest personal loan. If a debt isn’t a problem but you don’t have a lot of disposable income to play with, consider taking a personal loan to do some day trading with. Just be sure that you can make the repayments on your current income.

Do Focus on Fewer Stocks

As a beginner, don’t try to do too much at once. Focusing on entering and exiting a trade, only one or two stocks at a time can help you learn and also helps you track them more easily. If you’re trying to do too much at once, you’re more likely to make mistakes and miss opportunities. Later, once you know the ropes better, you can complicate things.

Don’t Get Hung Up on Profits

This advice may sound as counterintuitive as it comes, but day trading is a lot like starting a business in that when you are not concerned about big immediate pay off you can focus more on strategy and long-term gain. If you are constantly worried about money, you may opt for moves that only make you small profits instead of looking at the big picture. While this is a risky business, some moves are too risky to even by day trading standards. However, worrying too much about profits early on can push you to make those unwise moves.

Don’t Stop Learning

This isn’t a field for those who want to master whatever it is they’re doing after a brief, intense period of study. Success means that you should be constantly learning. Not only should you always keep abreast of the data instead of making decisions with your gut but you need to be aware of how ideas about the markets change over time. In addition, you will need to stay on top of global events and how they affect the markets. If lifelong learning sounds like a dream to you, you’ll enjoy this much more.

Do Write it Down

Over time, your own historical data will become as useful as the information that you glean from outside sources. There is software that will help you track and analyze such things as prices, your performance and much more.