4 Tips And Advice For Novice Day Traders
Most of the population is looking for ways to attain financial freedom and earn more income. Investing is one of the solutions to this need. Many avenues exist to help with your investment, one of them being trading. In basic terms, trading is the buying and selling of goods and services. However, in this context, it’s the buying and selling of financial instruments, such as stocks, bonds, and cryptocurrencies.
The trading world isn’t quite challenging, nor is it too simple. There are many types of trading, and the difference lies in the length of time you hold your stocks—some do it for a few hours, while others, for months. This article focuses on day trading, wherein you buy and sell financial instruments within a day.
But, how will you go about it as a novice day trader? This article helps you answer this by giving you tips and advice, backed by experts in the business. Read on for the details:
- Consider Automation
Trading isn’t an activity you can learn overnight. You need time, practice, and patience to get the hang of it. However, as you learn the game, it doesn’t mean you can’t still earn from day trading. You might want to consider automation.
Trading automation is possible thanks to artificial intelligence. You can use trading bots for EXMO, one of the many trading hubs you can choose from. These bots will trade on your behalf, with or without your presence. All you have to do is set the price at which the trading bots should buy or sell a stock.
You can set the purchase price to be USD$7 and the selling price to be USD$10. Should the market price of a stock you’re trading be USD$7, the bot will go ahead and buy the stock for you. The same happens when the price reaches USD$10; the trading bot will sell a stock, making you get a profit. This is the principle of trading automation with bots.
It’s good to note that many companies offer trading bots. However, not all of them function the same regarding efficiency and features. For example, Bitsgap is best known for trading with every price change. It increases your chances of making several trades in a day. Do your due diligence before settling on a given trading bot. Remember, efficiency is key.
- Understand The Market
You cannot trade efficiently without thoroughly knowing the market. This knowledge will help you know when to trade and when to sit back and observe. Familiarize yourself with the latest news in stocks, trends, and economies. These are some of the common aspects that affect the price of stocks.
As a novice trader, it helps to list the stocks you wish to trade. It’ll be much easier to learn about a few stocks through your list than to learn aspects of several stocks. You might get overwhelmed and be sloppy in your study, which negatively affects your trading.
You can invest in several tools to help you understand markets and learn the current trends. Be sure to have them at hand before starting your day trading.
- Set Limits
Day trading means you’ll be buying and selling stocks throughout the day. However, it’s important to set limits on the amount you can trade daily. Why? There’s a high possibility of letting greed and fear take over your trading without limits. Both situations aren’t ideal. You won’t take advantage of the market with fear, while greed might lead to numerous losses.
Therefore, consider setting the minimum and maximum amount you’ll trade in a day and stick to this limit, whether it’s a good day or not. These limits should be money you’re willing to lose.
- Eliminate Emotions
Trading is often volatile, meaning you can easily make a profit or a loss within seconds. This is likely to stir emotions that’ll make you make wrong trading moves. Trading with emotions is something you shouldn’t do, not only as a novice but also as an expert. Suppose you make several wins continuously with a given stock. You’re likely to get overconfident and continue trading. You’ll believe that the same trading pattern will make you make more profits, which might not be the case. There’s a likelihood of you not analyzing the charts properly, and you could end up making tremendous losses.
On the other hand, suppose you undergo several losses. This might make you lose hope and abandon trading for the day. Once you do that, you’ll lose opportunities where you can easily turn things around and make profits.
All in all, learn to master your emotions. Please refrain from trading when you’re too happy or too sad. Your emotions need to be neutral, such that you’ll make conscious trading moves. You’re less likely to make mistakes when you’re sober emotionally.
You’ve seen how easy it is to maneuver day trading as a novice from the discussion above. However, you can only do this with the right guidance, as this article gives. Therefore, consider implementing the tips given herein to have an easy time trading as a novice, even as you learn the trade.
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