Tips to Become Successful in Day Trading

Day trading occurs when you buy and sell a security within one day. While it occurs in all marketplaces, it’s often seen in the Forex and stock markets. While day traders are often well-funded and highly-educated, it doesn’t mean that a regular person like yourself can’t get into and be successful. The important thing is to understand the terms and lay out strategies to ensure your success.

If you want to get involved in the day trading market, try to consider these 15 tips below to help you become successful:

You might want to watch this video first. 

  • Keep a Journal of Trading Rules 

Before you even get involved in the market, it’s imperative to develop a list of rules to abide by.

Tips and Advises for Beginners

These rules should include how you’ll enter and get out of a trade, the amount of risk you take on a particular trade, etc. Things to consider before investing stocks.

The biggest obstacle newbies face is the lack of discipline. After all, they’re excited about the prospect of making money. However, the rules will keep the emotions in check and fortify your resolve of sticking to them.

  • Be Mindful Of Your Emotions and Ego

It’s okay to leave a position when the fundamentals are clearly showing you’ve made a mistake in getting involved in it. It’s not uncommon to make mistakes, even by experienced traders.

The best thing you can do is think practically. It’s not uncommon for traders to throw caution to the wind when dealing with a losing streak. However, this often leads them to lose even more money. If they’re experiencing a good streak, they may take even bigger risks that are not supported by any statistics.

Avoid emotions and ego and stick to discipline and rational thinking if you’re going to be successful. You won’t be making impulsive decisions, and you’ll stick to the trading strategies and rules that ensure you can be successful.

  • Add A Stop Loss 

When it comes to profiting and losing, you have to consider how much loss you’d be okay with losing before you leave the market. Once you decide this amount, keep with it. This keeps you from getting too greedy when the market spikes and mitigates the losses that can happen when the market suddenly downturns.

If you’re already trading in the market and have attained your targets, create new stop loss and profit levels.

  • Have A Maximum Daily Loss Set 

This will be the amount of money you can financially and mentally withstand losing in a trading day. This is the time you need to exit the position and stop trading the rest of the day. Don’t go back into it, even if the urge is there to make up for the loss.

Day traders look at their performance by the amount of money they have and how well they abided by the trading strategies. If you stick with your strategies, you can recognize where the problems are. If you don’t, you won’t know where adjustments need to be made.

  • Have A Risk Reward Ratio 

Novice traders should look for minute losses and big gains. A 3:1 risk reward is ideal for novices. What does a 3:1 ratio mean? It means for every three losses you have; you’ll have one good win. The more experience you get in the market, the higher your ratios can become.

  • Have A Simple Strategy

The easier your strategy is, the more successful you can be with trading. You’ll know when to get into the market and when to get out of it.

  • You Don’t Have To Trade Every Day 

Many people are under the assumption that to be successful they need to trade every day. The only time you need to trade is when opportunities arise that meet your goals. If something doesn’t feel right, don’t trade. Listen to your gut and keep to the trading plan.

  • Spread The Risk

There’s an old saying, “don’t put all your eggs in one basket.” When it comes to trading, you don’t want to put a lot of capital into one stock. Set the trading amount to no more than 10 percent of your budget. The amount you invest depends on how much money you have and your personal preferences. 

Make sure to invest only what you can comfortably lose. How the risk is spread needs to be determined by three things: 
  1. How much risk you want 
  2. Your short-term goals
  3. Your long-term goals

  • Find A Niche and Stick To It

You can day trade in stock, options, futures and forex, but it’s better to learn a niche and stick by it. It doesn’t matter how good the other options are; until you’ve mastered it, you shouldn’t try the others.

  • Liquidity and Volatility

The two qualities you want in stock is volatility and liquidity. Stock liquidity lets you buy or sell stock at a decent price; volatility gauges the price variance for the day. When a stock is considered volatile, it could be a trader’s dreams come true or their worst nightmare.

  • Don’t Purchase More of a Losing Stock

When you buy more of a losing stock, you may only set yourself up for failure. You may think it will reverse its losing streak and earn you cash, but what if it doesn’t? There are many stocks on a bull run. Trade in those unless you have real experience in the stock market. 

  • Avoid Putting Focus On A P&L Account

Your attention should be on your trading plan and chart. You will incur some losses, but sticking with the strategy means better wins that eliminate the losses. If you notice the account is suffering multiple losses, you may start making decisions on emotions – not common sense.

  • Don’t Act Impulsively

If you’re going to be a successful trader, you need to be disciplined. If you stay in one position too long or get out too early, you may feel aggravated with the results you’re getting. Learn what to avoid in stocks trading

  • Conduct A Daily Review

There are four key questions to ask yourself after the day trading has ended: 

  1. Did you abide by the rules?
  2. Were there any weaknesses?
  3. Will you improve those weaknesses?
  4. Was the trading strategy you came up with working?

  • Practice Various Situations

Practice makes perfect. To become a smart trader, you need to practice. Write down mistakes made and what went well. You’ll only make money if you repeat what has worked and avoided what didn’t. What do you need to do with your trades? Stick to the rules you’ve laid out such as pricing actions and when to enter and get out of a trade.

Before you know it, this will come naturally, and you can implement the strategies you’ve created in real-life.


Watch this video below as how day trading actually works!

Final Thoughts:

Your success at day trading boils down to one key thing - determination.

You must be determined enough to come up with a great investment strategy plan and maintain a level head throughout the process.

Don’t allow emotions to make your decisions. Instead, focus on the rules you have set for yourself and follow these tips to be successful in stock trading efforts.

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