Everyone has started loving the idea of financial freedom. Many teenagers and young adults have begun investing in the stock market after getting inspired by the concept of financial freedom. According to Sebi, around 10.7 million Demat accounts have been opened between April 2020 and January 2021.
Many fresh traders have also started investing as day traders. It is good to start investing at a young age, but you should gain the necessary knowledge required for investing. Trading without understanding is like shooting arrows in the dark. Prepare yourself for the market and then dive into this market to reap the profits!
What is day trading?
Day trading is known as intra-day trading. It refers to the purchase and selling of stocks in a single day. The trader opens and closes his/her position before the market closes on that day. Many people have started investing in day trading.
How does day trading work?
The primary aim of people who are investing in day trading is to earn profit. The approach of intraday trading is different from that of long-term investments. The stocks are selected based on their price action. There is no intention of long-term investments in day trading.
How to select stocks for day trading?
Selecting stocks for intraday trading is a crucial step in this process. Selection of stocks should be made only based on your knowledge. You need to research the market correctly and analyze the opening prices of stocks before the starting time of the market.
You need to understand the nature of the market, whether it is bullish or bearish. Then, you need to select your stocks according to the market. The only way you can choose stocks for day trading is by researching the market and using your knowledge.
Well, what if you are new to day trading? Don’t worry; we will discuss 8 working tips for beginners. This article can also be referred to as day trading for dummies. These tips will help you start your intraday trading in 2021-
Don’t borrow shares from your broker
This process of borrowing shares is known as leveraging. Many neophytes start leveraging the broker for taking a more prominent position in the market. It would be best if you did not do this at your early stage. Covering your losses will be difficult once you lose your money.
Analyze stock chart patterns
If you want to learn intraday trading, get to know about different stock chart patterns. You will get plenty of resources for learning these patterns. For example, the majority of penny stocks move in patterns. If you identify these patterns, you can create opportunities for yourself.
Design your portfolio
Almost every trader focuses on making a personal portfolio of stocks. However, you must include stocks after thorough research as you will be responsible for your trade. In addition, the stock market is dynamic, and hence you must include diversity in your portfolio.
Select volatile stocks
If there is no movement in a stock’s price chart, you will not make considerable profits. Therefore, you need to include stocks with high volatility in your portfolio. Long-term holders also prefer volatile stocks as it is easier to sell these stocks.
Continue the process of learning
The nature of the stock market is highly dynamic. You can never assume that you know everything that is needed for trading. Updating yourself with facts and figures is of utmost importance. Every trader needs to have an adaptive nature.
Use your funds wisely
Managing your funds is also vital while trading stocks. You cannot afford to lose all your funds. Don’t reinvest all your profits. Reinvesting everything can turn out to be a precarious move. Set aside a part of these profits as a separate fund.
Start with small funds
You need to get net practice before the official match. Scale up your investments with time. Start with small funds and get yourself familiar with the nature of the market. Profits will be small in the beginning, but you will learn a lot in this process.
Learn risk management
You are bound to make losses in the market. Cut on your losses and keep learning from the mistakes. Identify your mental stops and act accordingly. Stay safe and be happy with smaller profits. This strategy will help you survive longer in intraday trading.