There is an age-old proverb that goes like, ‘Practice makes perfect.’ We know very well that human beings are never flawless. They make mistakes and make wrong decisions. But, by practising, a man can become closer to perfection. That’s why the importance of practice is simply undeniable in our lives.
Let’s assume that you are not good at math. But being bad at it is not going to help in the long run. So what do you do then? You start practising math every day. Eventually, you will find yourself getting better. This is the perk of practice in our lives.
Practising can make our lives better in all aspects and trading is not an exception either especially if you are a day trader. If you are well-informed about the trading sector then you must already know what a day trader is. But if you are new to this field then don’t worry, we will fill you in as much as we can!
A day trader is an investor who trades stocks within the same trading day. That means a day trader buys and sells stocks in between the opening and closing of the same trading day. Day trading is highly liquid and volatile so the main objective in this trading is to gain profit from small price movements.
For example, the opening price of a commodity is $10 and the highest line reaches at $15 at 10 AM GMT, later that day, the price closes at $12 after falling to a low of $8. Therefore, we can say that, since the closing price is higher than the opening price, it can be indicated as a bullish candle in the candlestick chart.
Now, a day trader buys his stocks at the most convenient and cheapest price and tries to sell them at the most profitable price within the day.
There are two types of day traders where one type usually traders through a medium like a broker while the other one simply trades individually. But to trade individually, a trader must own an individual trading account.
A day trader is usually a trader by choice and often is not their main profession. As a result, they don’t invest much time or capital in trading. But since the trades open and close within the same day, the amount of risk is comparatively less here than in other types of trading. People who have knowledge about the bond market know perfect way to assess the risk. Always buy bonds online with low risk so that you don’t have to deal big losses.
Since day traders are not professional traders in most cases, they don’t have the necessary skill and understanding they need as a trader. Even though, that isn’t much of a problem for them due to the lower risk, following some techniques can help accelerate their trading careers.
Adopting a trading plan
We highly encourage day traders to adopt a suitable plan for their trading. They are enormously useful. Having one saves you time, makes your work easier and there are more benefits. A trading plan mainly organises all your activities in a systematic pattern and priorities.
A trading plan can consist of many strategies that are well-engineered to bring positive outcomes out of your trading.
Again, once you become used to your trading plan, you will be able to work more efficiently than ever.
Keeping a trading journal
Keeping a record of your trading career is a good habit to follow while day trading. If you always note down your daily records in forms of journals, they can come in handy in future. A trading journal helps you to pinpoint your mistakes as well as the strategies you use to win a deal.
So, you will be able to refrain from make those mistakes in the future by applying strategies that work for you. A trading journal also helps to keep an account of loss, profit and financial condition.
As a day trader, you should know that it is always the best to focus on one thing at a time. Because it helps to keep a track of it without making our attention diverted to other things. In this way, through continuous practising with a trading plan, you can become a successful day trader.