The term day trading refers to where the market position is only held for a short. As a day trader you will often buy and sell on the same day. But during the 1990's this form of trading earned quite a bad reputation. This was a result of many new day traders using the new online trading platforms.
These people thought that they would be able to make a fortune without much effort or knowledge. This just wasn't the case.
But day trading is that complicated. You just need to learn some simple rule based strategies that will help you to foresee how the market is likely to move. To help you on your way we offer up a few secrets as a novice day trader you may find useful.
Secret 1 - Look for scenarios where supply and demand aren't balanced. Then use these as your point of entry. The financial market is like anything else. Should supply be close to exhaustion, but people are still willing to buy the price goes up. But if supply out weighs demand then of course the price goes down.
Secret 2 - You should always set yourself price targets before you begin trading. When buying a long position you should decide beforehand just how much profit will be acceptable as a stop loss level. This will protect you should the trade turn against you. You need to stick with these decisions. Not only will it help to limit any potential loss. But will prevent you from becoming too greedy if the price spikes at a level considered to be untenable.
Secret 3 - When setting your targets insist on a risk/reward ratio of no more than 3:1. This will allow you to lose small but win big. Ensuring that you come out ahead even if losses on most of the trades you make.
Secret 4 - You need to be patient when it comes to day trading. Quite a few of the more successful day traders don't trade on the market each day. If they don't see any opportunities when at their computer then they won't execute a trade.
Secret 5 - It is vital that you learn discipline when it comes to day trading. This is why you must set yourself a trading plan then stick with it. When trading on your own being impulsive can be your worst enemy. It could result in you keeping a position for too long or cause you to bail out too soon.
One thing you should always remember is that you won't get rich of one single trade.