What are some tips for beginners at day trading?
Day trading is also known as intraday trading and short-term trading, commits to buying and selling shares of a stock within a single trading day. So, between the time of the market open and close, you execute and square off your position.
The goal of day trading is similar to just about any other method of trading or investing: to earn a profit. But the way that you approach that goal is a little different of day trading.
For example, if you buy shares of a blue-chip company, you’re binding to a long-term relationship. This is a company you believe in or at least you believe their share price will increase. While in day trading, you don’t buy a company’s shares because you believe this company has what it takes. Also, you don’t plan to cling on for long.
You choose stocks based on price volatility. The stock could be going up for a variety of reasons like big news, a new contract, or a new product. You hope to take advantage of short-term price fluctuations. On the other hand, you might short sell based on negative news that could cause fluctuations.
Here is an overview of some helpful strategic tips:
Determine Entry and Exit Prices
- Try to analyze the best entry point by understanding the supply and demand which are drastically out of balance and against the market.
- These are often determined by looking at a stock’s historical data. Once you plan your entry and exit, stick to it.
Employ Stop Loss for Lower Impact
