Most of the people believe that day trading and gambling are the same thing. But very few actually know the difference. Can you forecast the kind of cards youll receive while playing black jack? No. you cant. But, in day trading, the moves of market are anticipated in advance. So how the two are same? It is important to understand that there are calculated and well thought risks that are bared unlike the instincts working in any of the gambling games.
In literal terms, day trading refers to the buying and selling of stocks in the same trading day before stock market is closed. The other name for day trading is intra-day trading and the traders who practice day trading is known as day traders.
As such, day trading is not a childs play. It involves great amount of brains to be utilized to earn better returns. The procedure to enter into the world of day trading, however, is quiet simple. The online trading facility has made it easy for any person to access stocks and trade in stocks. Presence of online brokers and brokerage firms further facilitates stock trading.
Choosing from many options available among stockbrokers tend to open a trading account and thus can start with your day trading venture. However, it should be noted that these brokers work for the commission that you have to pay with each transaction, thus, lower the commission, better for the trader.
Well, it is pointless to say that trading in stocks is quiet risky as all of us are aware of this fact. But, a thorough research work, intelligent broker and some techniques can get you through this risk sail with positive returns. Here are few guidelines that are to be followed for better results in day trading.
- Trading in right direction: it is the first step for success in day trading world. Always buy when market is going up and sell when market is going down. However, exceptions are always entailed due to individual performances of companys shares in the stock market . Many a times a company share may fall in spite of the growth in the market. Hence, it is advisable to sell that kind of share unless a boom is expected in that particular venture.
- Decide upon your sense levels: it involves deciding upon the amounts of your share prices. To avoid bankruptcy it is the best option to opt for. Sometimes, getting emotional or hoping to get the conditions better worsen the situations. For example, a lot of 100 shares at the rate $50 per share is purchased. It may go up to $56 per share and starts falling. You should develop your own rates at which you would like to sell this share in the market say $52 else you may incur loss by selling at 45$, in hope of the improvement in this share. Hence, deciding in advance about the prices to be sold tends you to be on a safer side.
- Integrate your investments: always divide your investments into groups of equity Midcap and largecap. Your portfolio must be strong enough to have a combination of various investments. Integration of investments avoids you from heavy losses.
- Invest your savings and save your investments: it is necessary to maintain a pre-decided level of initial investment. Do not trade with all the profits you make. Learn to trade with proportions that help to avoid making losses and bankruptcy.
- Be an above average trader: being consistent and playing safe tends to raise the level above average. Dont get disheartened in case of losses. Take it as a part of game. Learn from every failure. However, the case should not be so that a day trader learn and learn and get bankrupt by the time he is ready to exploit his knowledge.
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