Beginners Guide to Day Trading|How to day trade stocks successfully

This article which you can take as a beginner's guide to day trading, provides the basics tips on how to day trade stocks successfully. This post is going to initiate you into the profitable venture of day trading in stocks if you wish to take the time to learn the basics of the game. It is imperative that one knows the essentials of how to day trade stocks successfully when it comes to making instant profit from online day trading in stocks. Any article on beginners guide to day trading online has to answer the questions-'what exactly one should know to get started, where to trade and when to stop and what are the rules and strategies of the game?' Here in this post I am going to share few basics day trading strategies, which if followed judiciously, I am sure would make online trading experience of a new trader enjoyable, safe, and profitable.

Can you really make money from day trading?

You must have heard about thousands of small investors like petite businessmen, retired persons, salaried executives, teachers, even students making fortune every day in stock market through day trading from the changing stock prices from minute to minute, using their personal computers. In order to understand what is really going on, and to become a successful day trader, you have to learn the stock market's state-of-the-art day trading techniques and to follow few basics day trading strategies and tips given in this guide for day trading by beginners. While discussing the fundamentals of how to day trade stocks successfully the single most important factor that needs attention is to have the discipline to repeat a proven strategy, consistently. Online day trading is actually a business with high risk as well as with great rewards that requires a great deal of research, time, and discipline to carry out successfully.

Why day trading is exciting?

It's no secret that investment in stocks is not only the best bet against inflation; it also gives an investor the opportunity to earn phenomenal returns in the long term. However, compared with such normal stock investing, online day trading in stocks is more exciting and is a great way of making a fortune quickly without remaining invested in the market for long, provided you play the game right according to the suggestions given in this post. One of the fundamental points of day trading in stocks is that there should be no long-term holding of stocks as in case of normal stock investment. In intra-day trading, you just focus on 1 or 2 stocks that you buy in the morning when the stock market opens and sell them before closing of the trading session making a neat profit from the trade. Your main attraction as a buyer in intra-day trading in stocks is the immediate satisfaction it offers you, since you can factually see your money growing as the stock price goes up.

What to do for a risk-free trading?

While intra-day trading can be a great way to make money if you play the game according to the rules and follow a disciplined approach as explained here, it can also be an easy way to lose money if you start thinking out of box or look at it as some form of gambling where you depend too much on Lady Luck. For a disciplined approach it is most essential for the new traders, to equip themselves with all information like stock splits, dividends, bonus announcements etc. in respect of the specific stocks singled out by them for special watch. The good side about online trading in stocks is that you can play in the market both as a bull as well as a bear. Although most of the time a day trader plays on the upside of the market he can also gain from the downside by selling shares and squaring the sale transactions well before closing of the market.

Who should go for intra-day trading?

Now the question is who should go for such trading? Regrettably, it has been observed that the temptation of making quick money has drawn many people in day trading who should not have otherwise gone into it. As a beginner's guide to day trading it is ideal that one should not go in for day trading, which is a high-risk arena, unless he has good knowledge about the basics day trading strategies and can give sufficient time and full attention to his stock holding. This would enable him to track the market online closely so that he does not miss out on opportunities during the trading session. Intra-day trading is, therefore, not advisable for someone who has a busy profession and cannot devote sufficient time to monitor the market from morning till the end of the trading session. Another important lesson on how to day trade stocks successfully is that to be a successful day trader, you should have the right temperament to keep all sorts of emotions like over confidence, fear, hope or greed at bay. It is imperative that you should carry out online day trading on the basis of data available on your computer screen only and not based on any personal emotions. Other important advice for a would-be day trader is to try a simulation exercise to test his stock trading abilities before taking the plunge into this high risk arena. For this, one can checkout the free website khelostocks.com, which facilitates creation of a virtual portfolio and allows a beginner to carryout experiment in day trading in stocks by playing the virtual game.

15 Day trading tips for beginners

As a beginners' guide to day trading let me now give here 15 most indispensable day trading basics tips for a first timer, which would enable him to move on to intra-day investing in stocks with success and minimum risk. Let me also mention here that the tips given below have been gathered by me from one of my friends who is a seasoned investor in Indian Stock Market and who enlightened me about an exciting theory of making hefty profit in stock market without taking any risk, which has been posted in my other article titled, how-to-make-money-fast-in-the-stock-market.

1. Devote your time to online day trading from opening till closing of the market;
2. Equip yourself with latest reports and technical data of 8-10 stocks on your day trading watch list;
3. For day trading in stocks invest your available surplus fund only, which you can afford to lose. Decide in advance how much loss you are prepared to tolerate on any trade;
4. Choose only highly liquid index-based large cap shares for intra-day trading so that you do not end up holding the stocks that have no buyers at the end of the trading day;
5. Do not invest in penny stocks which have low liquidity;
6. Do not trade in more than 2 stocks at a time so that you can monitor movements of your stocks online closely;
7. While buying stocks for trade fix the entry and target prices beforehand so that you do not miss the opportunity to maximize gain from the market upside;
8. Use stop loss trigger facility to curtail your losses if the prices of your stocks in trade move beyond a limit specified by you;
9. Do not convert a stock under intra-day transaction into a long-term holding instead of squaring the same at the end of the day, which may be a costly mistake;
10. For stock that is rising and falling, buy near low price range and sell as it hits the high price range;
11. Sell and book profits every time the stocks reach their target levels prefixed by you. If required you can always buy back the shares again at lower price levels;
12. While normal stock investment may yield phenomenal returns in the long-term, try to be content with comparatively small gains from intra-day trading, which, after all, may not be bad for a single day’s work;
13. Follow the strategy that assumes that the stocks that having been rising steadily will continue to rise;
14. Buy stock in a company which has just announced good news;
15. Allocate not more than 10-15% of your total stock portfolio to online day trading;

Conclusion

Day trading in stocks can be one of the most thrilling and rewarding activities that you ever have undertaken provided you properly research all your trades and play the game right according to the basics discussed in this article. A good understanding of the basics discussed in this post on beginners' guide to day trading will provide the foundation that will enable efficient learning of more advanced topics on various aspects of day trading and strategies of profiting in short term.

You may also enjoy reading my other article about 'stock market investing basics'