Where there’s risk, there’s gain. Stock trading or any other commodity trading is risky but can be rewarding if you’re determined to succeed.
While i can not cover the ins and out of stock trading in this post, I’d like to discuss 10 trading tips to help you.
Sit back, grab a cup of coffee, a pad and a pen while you’re reading, some important points can be noted on your pad.
- Study the Stock Exchange
There is a lot to explore for a novice trader. Before even making a trade, the most important basics should be understood.
The trader must be able to answer the following questions:
- How does a price come about?
- Which market participants am I facing?
- What are the trading hours and what determines the prices?
- What are the characteristics and pitfalls of my chosen financial instrument?
- What influence do geopolitical and monetary policy news have on my chosen asset?
Always remember: If you do not prepare yourself optimally for trading on the stock exchange, you will be outwitted by the so-called “Big Boys”.
This includes investment banks and hedge funds managers, the real professionals of the markets.
- Don’t Commit much Funds in the beginning
No matter how much wealth you currently have. Start day trading with as little capital as possible, Techpally boss emphasized.
There is the famous 90s rule – “90% of all private traders lose 90% of their capital in the first 90 days.”
And it’s true, most beginners start learning on the stock market. You may be part of it too.
So ask yourself the question – would you rather lose 90% of 1,000 $ or would you rather lose 100,000 $?
With the proper preparation and the tips that you get here, you should not make such costly mistake.
Just make it clear to yourself that it takes a long time to make good money and be sustainably profitable, Techpally business editor.
- Be Time Disciplined
Time is a precious commodity. We all have to get by on 24 hours a day.
In addition to work, family, sport, and relaxation, you now want to find time for day trading.
Does your family understand that?
You should therefore plan exactly when you will devote yourself to day trading and what exactly you will then do.
The first few months are all about building up specialist knowledge and testing strategies on demo accounts.
Don’t make the mistake of looking at the charts for 2-3 hours!
You don’t learn anything and make emotional decisions based on your gut.
- Test Every Strategy on Demo Account
You have a huge tradable markets and financial instruments at your disposal. For example, start with CFDs in the forex or stock market.
Familiarize yourself with the markets and their trading hours, volume, and correlations with other markets.
This is where building your day trading strategies begins.
- Be careful with Broker Bonuses
In the beginning, you’re tempted to make huge profits.
You want to get rich quick. Yes, we all want to, but it doesn’t work like that, says TechPally
In day trading, we want to collect constant, small profits according to a fixed process.
This means that you benefit from the compound interest effect promptly with manageable risk.
Most times, Broker recommendations attract you to make some trades or the seemingly 100% bonus when you deposit and trade.
Make it clear to yourself that nobody can know whether a share, currency, etc. will fall, rise, or go in circles!
Your goal must be to find and trade YOUR trade setups.
Don’t not allow yourself to be influenced by outsiders and, at most, use neutral analyzes to help you make your decision.
- Understand the Trading Hours
There are 3 major trading sessions a day. The Asia Session, the London Session, and the New York Session.
The trading day starts in Asia, London then brings in real volume (between 08-09 a.m. CET) and New York closes the deal.
During peak times, it can become very volatile, new trends emerge, etc.
With a high level of liquidity in the market, broker conditions also improve.
The spread becomes smaller and with it your costs, says Techpally boss.
Shortly before the close of trading, most brokers tighten the spreads again and your costs rise, which leads to less paper profit or more paper loss.
- Limit losses with Stop Loss
You can trade any time as trading is almost around the clock. The forex market is open 24 hours Monday through Friday and American stocks are usually traded til 10 p.m.
Depending on the trading style, an open position continues at night.
You should work with limits (even during the day) because an unforeseen event can crash the markets in a few seconds and turn your position into a heavy loss.
It belongs to the basic equipment of every trader to work consistently with stop loss or hedging.
For the start, I recommend the Stop Loss. This will keep you able to act.
Always remember, losses are part of trading!
You will always give back part of your profits, because not every trade is positive.
With strict risk management (this includes the stop loss) you limit the losses.
- Be Realistic
The best day trading strategies are characterized by more profits than losses over a significant period.
This means that a trader can also be successful if he loses $ 100 on 5 trades in a row and wins $ 600 on the 6th trade.
Most profit traders have hit rates between 50-70% and earn very good money with it.
Don’t try to find the one monster trade that will make you a millionaire.
It is the persistence of a winning strategy that brings you into financial independence, says Tech pally CEO.
- Remain calm and Disciplined
There are days when everything goes against you. And I mean EVERYTHING.
Four losing trades in a row, a bitchy partner at home, and your soccer team lose 5-0 at home
The market will keep putting you and your patience to the test.
Make it clear to yourself that in bad times you need to have the strength to get up from your desk and stop trading.
Unfortunately, many traders do the opposite and look for “revenge trades”, according to the motto: “We’ll wait, bad market, I’ll show you who is the stronger here”.
Do yourself a favor and don’t mess with Mr. Market. He sits on the longer lever.
- Develop a trading plan and stick to it
A successful day trading strategy always consists of tried and tested parameters.
These parameters can be technical indicators, candlestick patterns, news, etc.
A trading plan then records when to trade and when not.
This can be a simple Word document or an Excel spreadsheet.
The trader has to orient himself to this trading plan daily and is only allowed to trade if all criteria of the “checklist” have been checked.
