Day trading is a popular practice that involves buying and selling securities within a day. Traders who subscribe to this school of trading typically close all their positions by the end of day. In other words, such traders do not hold long or short positions overnight. Here are some tips to help you succeed as a day trader:

Grasp Trading Basics before Deploying Technology

Thanks to the IT technological revolution that has occurred in the last 10 years, traders can easily access all manner of trading tools. However, do not rush to adopt such tools if you do not understand trading basics. If you do so, it is highly unlikely you will be able to exploit and turn their full technological advantage into profitable trades.

Create a Trading Plan

Create a trading blueprint that will act as a guide on buying and selling securities, allocating money to trade diverse assets, as well as cutting losses. Since day trading involves dealing with highly fluid markets, fast-changing economic landscapes, and periodic interest rates, it is wise to create a flexible plan. This means you have to review your plan regularly to keep abreast of developments that can affect your day trading activities.

Avoid Unrealistic Expectations

Although trading has made a few individuals such as Warren Buffet immensely wealthy, none became multimillionaires or billionaires overnight. In fact, Buffet’s wealth is largely derived from solid investments made years or decades ago. Do not even try to emulate Wall Street hedge funds because they usually have at their disposal tools that the average day trader can only dream of using, accessing, or owning according to Business Insider. With this in mind, temper your expectations and enter into the day trading industry ready to begin with modest investments and build wealth slowly over time. In addition, expect losses along the way.

Consume News Voraciously

You cannot succeed as a day trader if you are not a voracious consumer of news. This is the only way to stay on top of developments related to tradable assets you are planning to buy, are holding, or planning to sell. Most professional traders use customized tools that contain so-called “economic calendar” and “day trading news” segments that cover topics such as likely mergers and acquisitions, looming interest rate cuts or raises, new product/service releases, current trade deficits, and exchange rates of specific currency pairs.

To a novice day trader, this may seem like information overload and unnecessary. The truth is experienced traders go through such information carefully looking for nuggets that they can use to close profitable positions before they turn into loss making territory or buy low-priced tradable assets that are likely to pop in coming days.

Take Measured Risks

Do not shy from taking measured risks in order to maximize daily earnings. A good example of a measured risk is trading binary options. Binaries are suitable for day trading because you can open or close positions within minutes or hours. Moreover, executing binaries trades is very simple compared to other tradable assets like futures contracts or derivatives, which Warren Buffet likened to financial weapons of mass destruction. To trade binaries, all you have to do is predict whether the price of a particular asset will rise or fall. You can earn return on investment of up to 80% if your prediction turns out to be right. Furthermore, binaries allow trading of diverse asset classes including stocks, currencies, and commodities. Expectedly, you will lose money if you make a wrong prediction.

Conclusion

It is possible to turn day trading into a source of regular income. Nevertheless, you have to proceed carefully if you are planning to do so. Strategies you can deploy to achieve this goal include creating a trading plan, avoiding unrealistic expectations, and taking measured risks.