Your one-stop day trading guide

Are you tuned in and ready to pull the trigger when the time arrives? Ok, this sounds more dramatic than it seems, but day trading has a very similar intensity.

For day traders, observing the market's every swing and then taking quick trading decisions as the market moves to make a profit seems a lucrative trading strategy. Day traders make the most of the stock market swings by trading in shares that will go up or down during a trading session.

The aim of day trading is to buy and sell financial assets with the goal of closing out the position by the end of the day.

Over the last few years, day trading has been gaining popularity across the globe. A huge reason for this growth is owing to technology, with fast broadband, mobile connections and real-time market information just a click away. This is giving trading newbies an opportunity to a journey of wealth creation by accessing money through day trading. To keep it simple – profiting from market volatility.

So let's learn more about it.

Using technical analysis for day trading

When it comes to trading, day traders are likely to use technical analysis like candlestick charts, line charts, etc., to analyze price movements. As a day trading strategy, their approach is not to load themselves with charts but rather concentrate on price movements. This is also known as 'price action trading'. Remember, these are traders that don't want to be second-guessing any of their actions.

For a few day traders, observing the previous day's performance is relevant to plan an effective day trading strategy. This does make a lot of sense. After all, the market sentiments could have changed by the next morning, either pushing the price higher or lower. For those trading in shares, this could be an essential strategy if these price levels are in play again and could be the cornerstone of their day trading strategy.

The psychology of a good day trader

Acts decisively

Stays level-headed

Doesn't let other traders' opinions influence them

Is patient

Is self-aware of their stress levels

Has a flexible approach

Sticks to the chosen market and a particular timeframe

Is never afraid of realising their profits

Keeps a detailed trading record

Day trading tips

Make and follow your own rules: When it comes to trading in shares or any other financial asset, discipline is a key attribute a trader must have, especially day traders. If you have defined a set of rules to govern your trading approach, it is best to follow them. Also, as much as you analyze reports and research documents, you need to analyze your bad trading behaviors and find quick solutions. Plus, if you are day trading, it will be a good idea to take the time and re-evaluate your approach every month and see what works, what doesn't and what can be done to work faster.

Manage your money: One of the most crucial elements of trading is money management. Take the take you need to find a method that you're comfortable with when you trade stocks and apply it. Don't deviate from the plan.

Manage your risk: Always have some form of insurance in place. For example, one way could be to have stop-loss orders when you trade stocks. This habit can protect you from any trades that go against you.

Six steps to day trade

Day trading is a short-term method that focuses on small price movements and can be great for anyone seeking a quick wealth creation strategy. However, whichever strategy is chosen, you must be disciplined to be a successful day trader.