Learning How to Day Trade

As you begin your journey in day trading, there are some important points to focus on from the very beginning. Learning to day trade is a process.  In learning this process, you will be investing your time acquiring a skill set that you can continue to use and profit from for years to come. Learning to trade stocks proficiently is the key to success and to do so you must be willing to invest your time and energy to learn all that you can in order to achieve your goals.

While you are learning how to day trade, it is important to practice on a virtual stock trading platform for a minimum of ninety days or until you are consistently producing an eighty-percent winning ratio. This is an important step as it gives you time to practice and  become accustom to your stock trading platform as well as the guidelines and strategies of day trading. By practicing your stock trading strategies virtually, before trading live, you will have a better feel for how to handle each stock trade that presents itself.

Always start out day trading with the amount of money you can afford to lose. Beginning your venture in day trading without being under the pressure of having to live off the money you make, adds to your overall success. By starting out with money you do not depend on to live, you will most likely be able to reach your goals much quicker as your mind will not be weighed down with the pressure of having to make money. Instead your focus will be completely on learning the steps to successful day trading.

Developing a stock trading strategy that fits your trading style, personality, and level of risk tolerance is important to achieve. Before entering a stock trade, you should have a plan of action or a set of guidelines to follow.  It is important to know approximately what price you will enter the stock trade and how you will manage the trade once you open the position, including where you will place your stop loss. Implementing a stock trading strategy or plan to follow develops boundaries for you to trade within. If you are looking for specific signals by using technical indicators, chart pattern recognition, and following the trend of the markets, you are focusing only on high probability stock trades. In other words, when you narrow down the criteria for the stocks you are looking to trade, you are reducing your risk.
Learn to wait for those great set ups that are high probability and offer the most profit potential. Learning to be selective when trading stocks is a great lesson and an often hard one to learn. However, patience pays off when you wait for the best possible set-ups. It is important not to veer away from your stock trading strategies because they are proven strategies that work the best to provide you with the most profit. Once you become confident that your strategies produce high quality trades, your profits will become more consistent, therefore producing more confidence.

Implementing a stop loss is a part of risk management and should also be a part of every stock trader's strategy. Before you enter any stock trade you should decide at what price your stop loss should be placed which helps to minimize losses. A good rule of thumb to follow, for placing a stop loss, on day trades, is between one and two percent.

Another component to building a solid stock trading strategy is determining position size. When you are first beginning to trade stocks, keep your position size small relative to your total account value until you continue to become more proficient and then begin building your position size. This will keep your overall losses to a minimum.

It is highly advisable to become proficient in one stock trading strategy before moving on to another; master one at a time, which builds greater success. Learning too many techniques at once can bog you down mentally. Remember, your goal in trading stocks is to be proficient and consistent. The way to acquire this is by being dedicated to continual learning, studying, and reviewing thereby building knowledge and experience.

One thing many beginning stock traders often fail to think about is learning to control their emotions. Emotions of fear and or greed often prevent new stock traders from being consistent in producing profits. By learning to approach trading as a method or a set of instructions to follow, you will have greater success while reducing careless mistakes. While you are trading in virtual mode, during your practice period, focus on how to execute stock trades with your emotions at an even keel in order to produce consistency. Remain focused on performing your task, which is following your stock trading strategy, and the money will come.

A vital component to the success of becoming a proficient day trader is to study and review your stock trades each day after the stock market closes. Consider these factors as you examine each stock position: did you enter the position at the best possible price, where you placed your stop loss, how well you managed the trade, and at what price you exited the trade. Make notes in a trading journal so you can go back and review later on. This may seem tedious at first, but you will soon discover that the more you study, review, and learn from your own mistakes, you will learn how to manage each of your stock trades' better and experience improvements and be able to move forward in your success as a day trader.

When you first begin day trading it may seem like a lot of information to take in but the more you study, review, and remain calm, with your emotions in check the faster you will catch on and continue to move forth in your success. The key to success in day trading is proficiency. By devoting the proper amount of time to your studies you will reap the benefits in profits and minimal losses.

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