All money transactions are done online. It is by design to track where the money goes in and out of their system to monitor fraud. Because it is all done over the internet, you may be tempted to try your luck with day trading. However, this is a tricky proposition because many novice traders fail in this game without any forethought or strategic planning.
Day trading defined
Day trading refers to buying stocks for less than one day to sell them the next day at a higher price for profits. It does not refer to holding on longer than one day (long-term investments) or using margin (borrowing from the broker).
Securities Laws Before you start taking your chances at day trading, be aware of the legalities. Day trading across international borders is tough because laws vary from one country to another. In the US, you need to have a minimum of $25,000 in your account before you can start day trading.
Keep learning
You have to spend time learning about markets and how they work. It will prevent you from making impulsive decisions based on emotion which can get you into trouble. Find someone who knows what they do and asks them questions whenever possible so that they can help guide you along the way without having to pay for this advice later on when it may be more costly.
Start small
If you have a lot of money, spend a tiny amount on day trading. If you do not have that much money to start with, then save until you have enough funds to try this at least once without putting your financial security in danger. However, keep in mind that even small amounts can add up over time, which is why it is best to invest a little bit every week or month so that you can compound your gains and increase your overall profits down the line.
Short-term goals
You should set short-term goals for yourself. In other words, decide what kind of profit level would be reasonable within a certain period (such as one month)
Stick to your own country
Although you can trade on international exchanges, it is best to stick with your own country’s exchange because laws are stricter. It will help prevent fraud and other illegal activities that could result in significant financial losses for you. When planning out your strategy, keep these in mind and suitable luck trading.
These techniques can be used in all types of markets (bullish, bearish, range bound), but understand how they behave before using them in live trading.
Scalping
The scalping technique involves trying to find small quick movements within the market. It’s mainly used with stocks and futures(find more info here).
With this technique, you will be looking for quick opportunities that last less than a minute, with around 3c or even smaller movements. The idea is to find the momentum in the market and jump on it before price reverses and move away from your entry point.
This technique might not seem very exciting at first glance, but when using it properly, you can make huge profits in a concise amount of time. You need to be highly focused while using this strategy because, most likely, you will only have 2-3 seconds before the trade is made!
Day trading range bound markets
With this technique, you are buying/selling during intense periods of trend and selling/buying during weak periods.
Day trading breakouts
This last strategy involves waiting for a breakout above or below the range and buying when it happens. This strategy is commonly used in bearish markets with range bound currencies like EUR/USD, GBP/USD etc. or in bullish markets when there is resistance at recent highs or support at recent lows.
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