Day Trading refers to market positions which are held only a short time; typically the trader opens and closes a position the same day. The concept got a bad reputation in the 1990’s when many beginners began to day trade, jumping onto the new online trading platforms without applying tested stock trading strategies. They thought they could “go to work” in their pajamas and make a fortune in stock trades with very little knowledge or effort. This proved not to be the case.
- Look for scenarios where supply and demand are drastically imbalanced, and use these as your entry points.
- Always set price targets before you jump in.
- Insist on a risk-reward ratio of at least 3:1 when setting your targets.
- Be patient.
- Be disciplined.
- Don’t be afraid to push the “order” button.
- Only day trade with money you can afford to lose.
- Never risk too much capital on one trade.
- Don’t limit day trading to stocks.
- Don’t second-guess yourself, but do learn from experience.
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