How to Make Money Day Trading Stocks
Making money day trading on the stock market is not for everyone, and it definitely is not something to just jump into. Day traders quickly buy and sell stocks, hoping to capitalize on daily, hourly or even down-to-the-minute rises and falls in stock values. Traders who make money in the stock market have a great understanding of technical analysis and spend time outside of market hours scanning charts for profitable setups. Traders must be willing to do research, sit in front of the computer for long hours and be prepared to make mistakes.
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Instructions
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Read as much as possible about technical analysis before even considering day trading. Day traders should be able to look at a stock chart and recognize a pattern within seconds. Learn as many chart patterns and formations as possible and think of each one as a tool.
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Choose a discount brokerage firm that offers low trade commission fees as well as charting software. Low commissions are important, as the fees seriously eat into profits due to the number of trades day traders made each day.
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Trade a few select stocks as you're starting out, and focus on learning their patterns and how they trade each day. Some stocks have patterns that repeat each day or each week, if you can find the pattern, trade the stock and capitalize on it.
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Aim for small percentage gains, and use stop losses to minimize your losses. Day traders make many trades each day, and these small gains add up. For instance, a chart pattern might show a setup that could make a 1 percent to 1.5 percent gain, so a day trader will enter the trade and set a stop loss a half-percent below the entry price. If the trade goes well, the trader might make a 1 percent gain, which can really add up if repeated 50 times a day.
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Tips & Warnings
Remember to take a small profit and be happy with it; it's much better than taking a small loss.
Separate your emotions from your trades. Emotions can make a trader favor a stock, preventing him from cutting his losses when things go bad.
Stock market investing carries financial risk. Day trading can be extremely costly and may take years to perfect.
References
- Photo Credit Duncan Smith/Photodisc/Getty Images
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Comments
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Just focus one stock or index in the beginning. Start to live in this stock or index by knowing if it is relatively high or low. Just learn the movements and the characteristics of this stock during the day times. Use a tool with candlesticks, volume and indicators to interpret the patterns. Only and only when you master a single stock with success you can move to another or mulitiple stocks.
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WHAT TO DO BE TECNICAL ANALLIST AND WHAT IS COST.
