Day trading is also known as spread trading. Day trading consists of opening and closing trades in a single day. It is called day trading but it’s traded all around the clock because when people go to sleep others are waking up in another part of the world. The internet has enhanced day trading since you can conduct your trades at the comfort of your home or in any location around the world as long as you have internet connection. The basics of day trading is to monitor the market and track every change in order to trade every opportunity the market offers. You will find, here, a day trading guide that will help you become a successful trader.
Cut your losses quickly
The key to any trading strategy is to defend your capital from a margin call before thinking of making any profit. There are rules that, if followed can assure you success. The most important rule you need to have is to reduce your losses as soon as possible. Many experts would recommend that you wait until your stop is hit, but that is not totally true as the only time you are allowed to wait is before opening a position.
Use tight stop losses
A tight stop is your best friend in this market. Never wait for a trade hoping that the market will reverse. Hope is a good quality in human nature but hope can be your enemy in the markets. Never hope that your trade will turn positive. Most of the time, a loser won’t become a winner. To become successful, you have to trade against human instincts. This is one of the main reasons; successful traders are so rare. Human nature is the reason why 90% of day traders fail in the first place.
Make sure every trade goes into profit immediately
As a day trader, you need to break every complex process into small parts and deal with each of those separately. That is why you should be constantly checking your day trading guide to make sure you don’t forget your own rules. This will help you in the better understanding of the trade. It is very easy to fail and very easy to succeed. Wait for the perfect moment to enter your trade. This will help you make your trade go into profitable territory immediately, if it doesn’t then your best strategy is to close it. This might be radical to some people, but it does work.
Don’t wait for the market to prove you are wrong
The best day trading tip is that it is not logic to wait for any market to prove you wrong. If the market does not prove you right as soon as you enter into a trade, it shows that you should leave immediately. Some of the most successful traders have been using these rules for decades and they sure do enjoy the benefits.
You also have to know the best currency pairs to trade and at what time. Four currency pairs are traded most in the forex market. It is important to stick to these currencies that have high liquidity.
Be on the lookout and exit a trade when you think it is about to go sour. Eliminate hope in your trading, it can be the cause of your margin call. Constantly keep revising your day trading guide to stay relevant in the market.
Day trading requires your attention in every moment of a trade. This is why you should have a look at the following guidelines to be on the safe side when starting out.