Day Trading Strategies for New Traders

What is Day Trading?

Day traders try to profit from intraday price movements in any market. In most cases day traders will close all their positions on the same day they open. However, within that limitation, there is a lot of variety in the way day traders try to make money.

Day trading in screen and hands of a business man.

Also day trading is speculation in securities, specially buying and selling financial instruments within the same trading day. Therefore, this can happen in any marketplace, but is most common in the forex market and stock market.

Typically, day traders are well-educated and well-funded. They use high amounts of leverage and short-term trading strategies to capitalize on small price movements in highly liquid stocks or currencies.

Here are some tips that can help refine your day trading strategy.

The basic Trading tips

Knowledge is Power

In addition to knowledge of basic trading techniques, day traders need to keep up on the most recent stock market news. And also in events that affect stocks – the Fed’s plans for interest rates, the economic outlook, etc.

Do your task. Make a wish list of stocks you’d like to trade and keep yourself informed about the selected corporations and general markets. Scan business newspapers and visit dependable financial website.

See also: Stock Definition: Basic Terms and Types of Stocks

Money Management

Before you begin, take a seat first and decide how much you’re willing to risk. Bear in mind most successful traders won’t put above 2% of their capital on the line per trade. Moreover, you have to prepare yourself for some losses if you want to be around when the wins begin rolling in.

And if you’re purchasing a long position, decide in advance how much profit is acceptable as well as a stop-loss level if the trade turns against you. Then, stick by your choices.

This limits your potential loss and saves you from being too greedy if price spikes to an untenable level. Furthermore, Exception: in a strong market it’s acceptable to set a new profit goal and stop-loss level once your initial target is successful.

Assess how much capital you’re willing to risk on each trade. Many successful day traders risk less than 1%–2% of their account per trade.

See also: How to Avoid Losing Money in Forex Trading

Time management written in wood with clock above.

Time Management

Don’t anticipate making a fortune if you only allocate an hour or two a day to trading. You need to constantly monitor the markets and be on the viewpoint for trade opportunities.

As well day trading needs your time – most of your day, in fact. Don’t consider it if you have limited hours to spare. The process requires a trader to track the markets and spot chances, which can arise any time during trading hours. Moving rapidly is key.

Start small

As a beginner, it is advisable to concentrate on a maximum of one to two stocks during a day trading session. With just a few stocks, tracking and finding opportunities is easier. Lately, it has become increasingly common to be able to trade fractional shares. So that you can specify particular, smaller dollar amounts you wish to invest

Despite the fact that you’re finding your feet, stick to a maximum of three stocks during a single day. It’s better to get really good at a few than to be average and making no money on loads.

See also: Things to remember when picking stocks


Understanding market details isn’t enough. You also need to stay informed. And make sure you stay up to date with market news and in any events that will impact your asset, such as a shift in economic policy. You can find a wealth of online financial and business resources that will keep you in the know.

Be a Patient Trader

Contradictory though it may seem successful day traders often don’t trade every day. Thus, they may be in the market, at their computer, but if they don’t see any chances that meet their standards they will not execute a trade that day.

Day trading requires discipline

Above all, beginners need to set a trading plan and stick to it. At Online Trading Academy, students execute live stock trades in the market under the guidance of a senior instructor until right choices become second nature.

If you’re trading on your own, impulsive actions can be your worst enemy. Also greed can keep you in a position for too long and fear can reason you to bail out too soon. Don’t anticipate getting rich on a single trade.


Furthermore, it’s harder than it looks to keep emotions at bay when you’re five coffees in and you’ve been staring at the screen for hours. You need to let maths, logic and your strategy guide you, not nerves, fear, or greed.


In addition, the market will get volatile when it opens every day. While experienced day traders might be able to read the patterns and profit, you should bide your time. So hold back for the first 15 minutes, you’ve still got hours ahead.

Only trade with money you can afford to lose

In particular, successful traders have a “small bucket” of risk capital and a “big bucket” of money they’re saving for retirement or another long-term goal.

However, big bucket money tends to be investing more conventionally and in longer-duration positions.It’s not absolutely forbidden to use this money occasionally for a day trade, but the chances should be very high in your favor.

Penny stocks word.

Avoid penny stocks

Naturally, you’re looking for deals and low prices, but stay away from penny stocks. On the other hand, these stocks are often illiquid, and chances of hitting a jackpot are often bleak.

Moreover, many stocks that trade under $5 a share become de-listed from major stock exchanges and are only tradable over-the-counter (OTC). If you see a real opportunity here and have done your research, remain clear of these.

Never risk too much capital on one trade.

As well, set a percentage of your total day trading budget (which may be anywhere from 2% to 10%, depending on how much money you have) and don’t let the size of your position to exceed it. Or else, you may miss out on an even better opportunity in the market.

See also: 9 Forex Trading Risks You Need to Consider

Time Those Trades

In addition, many orders placed by investors and traders start to execute as soon as the markets open in the morning, contributing to price volatility. A seasoned player may be able to recognize patterns and pick properly to make profits.

However, for newbies, it may be better just to read the market without making any moves for the first 15-20 minutes. The middle hours are typically less volatile, and then movement starts to pick up again toward the closing bell. Though the rush hours offer opportunities, it’s safer for beginners to avoid them at first.

Don’t limit day trading to stocks.

Such as, Forex, futures, and options are three asset classes that display volatility and liquidity just like stocks, making them ideal for day trading. And often one of them will present appealing chances on a day when the stock market is going nowhere.

Be Realistic About Profits

A strategy doesn’t need to win constantly to be profitable. A lot of traders only win 50% to 60% of their trades. The point is they make more on their winners than they lose on their losers.

Make sure the risk on each trade is limited to a particular percentage of the account, and that entry and exit methods are clearly defined and written down.

See also: 5 Famous Investors and their Secrets

Don’t second-guess yourself, but do learn from experience.

Each day trader has losses, so don’t kick yourself when the occasional trade doesn’t go your way, particularly if you’re a beginner. Do, however, confirm that you followed your established day trading rules and didn’t get in or out at the wrong time.

Stay positive word written in paper.

Stay Positive

There are times when the stock markets test your nerves. As a day trader, you need to learn to keep greed, hope, and fear away. Choices should be governed by logic, and not emotion.

Stick to the Plan

Successful traders have to move fast, but they don’t have to think fast. Because they’ve developed a trading strategy in advance, along with the discipline to stick to that strategy.

It is significant to follow your plan carefully instead of try to chase profits. There’s a mantra among day traders: “Plan your trade and trade your plan.” Don’t let emotions get the best of your strategy.

Final Thoughts

Now that you know some of the popular day trading tips and strategies, you can start to develop your own tool box of day trading methods. There are plenty of resources on the web to learn day trading strategies and start developing your own.

Day trading online can be very satisfying if you are committed and prepared to put in the time. Successful day traders take their trading seriously and treat it like a full-time business instead of a hobby.

It’s worth the effort though. Once you can reliably generate profits in one market, you will rapidly be able to transfer those abilities to another market.

 You will be able to work without having to answer to a boss or deal with clients, and you will be able to trade anywhere and whenever you like.

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