What makes investments great is the many paths you can go down. There are strategies for long-term investments, and then there are strategies for short-term ones. Day trading very much fits into that second category as it involves buying and selling assets very quickly. It’s something you do every day, and there’s a lot of money to be made if you do things right.
For any beginners out there looking to start day trading, this guide is the perfect place for you. You’ll find some essential advice to help you on your trading journey.
Set A Budget
One thing you should avoid is risking all your money on your trades. Instead, you need to set a budget aside to spend on the assets you’ll be buying. Deposit a set amount of money in your trading account, and that’s what you’ll use for various trades. The general rule of thumb is to never spend more than 2% of your account balance on a single trade. This helps you lower the risk of losing all the money you deposited.
Pick A Market That Works For Daily Trades
The whole concept of day trading is to make trades that last for a day at the most. As such, you’re looking for markets where prices can fluctuate quite a bit. Some stocks and shares are like this, as are some currency pairs in the forex market. Digital currencies, such as bitcoin, shouldn’t be overlooked either. As this bitcoin to USD chart shows, the price can change quite a bit during the day, so there’s money to be made. You should avoid trades in markets that are very steady and stable with no changes in price for days, weeks, or months. These are pointless for a day trader.
Become A Morning Person
You won’t have a great deal of success if you start trading in the middle of the day. Some markets are 24 hours, while others open in the morning. You need to become a morning person and wake up early to begin trading. Otherwise, you could miss out on so many great deals and opportunities by not being up early enough.
Spend A Week Or Two Learning
It’s not advised that you jump into day trading right away. Put your money to one side and start learning instead. Spend a week or two just watching the market you’ve chosen. See if you can spot patterns and learn the right way to do things. You may find that there are peak times where certain assets drop to a low price and other times where they appreciate and can be sold. If anything, this time will get you used to the feel of the trading platform and help you get into the rhythm of being up early and trading all day.
Take this advice onboard if you want to start day trading. It’s a good way of making money through short-term investments. Start off small, and work your way up. When you start seeing success, hire a broker so you can make even more investments and make even more money.