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The Fundamentals of Day Trading

The activity of buying and selling a security in a single trading day is known as day trading. While it may happen in any market, the foreign exchange (forex) and stock markets are the most prevalent. The majority of day traders are well-educated and well-funded. To profit from minor price movements, they employ huge leverage and short-term trading tactics.


Day traders use numerous intraday strategies. These strategies include:

  • Scalping: this strategy attempts to make numerous small profits on small prices changes throughout the day

  • Range trading: this strategy primarily uses support and resistance levels to determine buy and sell decisions.

  • News-based trading: this strategy typically seizes trading opportunities from the heightened volatility around news events

  • High-frequency trading (HFT): these strategies use sophisticated algorithms to exploit small or short-term market inefficiencies


Best Tips I Have Learnt From Trading (When I Was A Beginner)

Don't be afraid to sell on a loss:

Losing $25 is better than losing $100, so accept your losses. When your strategic analysis has been compromised, don't use "hope" and "luck" as your benefactors. Take it and move on to something with more potential.

Use winnings as an advantage, but don't get overconfident:

Winning 6/10 times is still a win. Use a good trade to your advantage mentally, and take note of how you won the trade. You will pick up little ideas and techniques to morph your trading techniques and strategies to your own. Write down what works and what doesn't, and treat it as a business venture, not a gamble.

Don't make the trade until your 100% sure:

Start with small money gains or even use a fake money account, and learn trading strategies & patterns. I also joined different telegram signal groups, and evaluated each of their signals before confirming my trade. This was a great introduction for me, and I recommend you do the same.

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A Day Trader's Characteristics

Professional day traders, or individuals who trade for a living rather than for fun, are usually well-known in the industry. They usually have a thorough understanding of the market as well. The following are some of the requirements for being a successful day trader.

Capital sufficiency

Day traders only employ risk funds that they are willing to lose. This not only protects them from financial disaster, but it also helps them trade without emotion. To profit efficiently from intraday market swings, a considerable amount of capital is frequently required.

Strategy

A trader requires a competitive advantage over the rest of the market. Swing trading, arbitrage, and trading news are just a few of the methods used by day traders. These tactics are fine-tuned until they consistently provide profits while effectively limiting losses.

Knowledge & Experience

Those who attempt to day trade without first learning the fundamentals of the market frequently lose money. A day trader should be able to perform technical analysis and understand charts. Charts, on the other hand, can be deceitful if you don't have a thorough understanding of the market you're in and the assets that exist within it.

Discipline

Winning and losing trades is part of learning. It takes time to remove emotion from trades. Accept losses before facing defeat. Day traders rely largely on market volatility to make money. If a stock moves a lot during the day, it may be appealing to a day trader. This could occur as a result of a variety of factors, such as an earnings report, investor attitude, or even basic news events.

Learn The Patterns!

The way I became a millionaire myself started from studying and using chart patterns. Let me tell you, these have stuck with me the whole way through.

Using consistent shapes and trendlines to locate breakouts, reversals and predictions easily gives you the upper-hand in trading (and no-one really knows it).

We learnt them all and how they are used here!

Example from the link above:

Symmetrical Triangle Breakouts (Common)

Some of the most prevalent neutral motifs are symmetrical triangles. When the price makes lower highs and higher lows, it forms a symmetrical chart pattern. The angles of the highs and lows converge to form a triangle. The pattern shows that neither bulls nor bears can exert enough pressure to establish a clear trend.

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No one has the upper hand, and as the price converges, one of them may be forced to concede. Buyers and sellers are pitted against each other when prices converge. Prices will break out upwards if buyers win; prices will break out downwards if sellers prevail.

Basic Day Trading Strategies You Can Make Money With NOW!

You can employ a variety of methods to aid you in your quest for earnings once you've mastered some of the tactics, created your own particular trading methods, and set your final goals.

Here are a few popular methods to consider. Although some of them have already been mentioned, they are worth revisiting:

  • Following the trend: Anyone who follows the trend will buy when prices are rising or short sell when they drop. This is done on the assumption that prices that have been rising or falling steadily will continue to do so.

  • Contrarian investing: This strategy assumes the rise in prices will reverse and drop. The contrarian buys during the fall or short-sells during the rise, with the express expectation that the trend will change.

  • Scalping: This is a style where a speculator exploits small price gaps created by the bid-ask spread. This technique normally involves entering and exiting a position quickly—within minutes or even seconds.

  • Trading the news: Investors using this strategy will buy when good news is announced or short sell when there's bad news. This can lead to greater volatility, which can lead to higher profits or losses.

Day trading is difficult to master. It requires time, skill, and discipline. Many of those who try it fail, but the techniques and guidelines described above can help you create a profitable strategy. With enough practice and consistent performance evaluation, you can greatly improve your chances of beating the odds.