Day trading seems like a dream career. You sit at your computer, sometimes from the comfort of your own home, and have the ability to make hundreds or even thousands of dollars off a single trade. In a matter of hours, you can bulk up your bank account by buying and selling stocks, commodities, securities, and more. It’s a thrilling ride.
But you can only be successful with day trading if you have the insights and knowledge on the best moves to make. You also need to know the secrets that the average person doesn’t have access to. Otherwise, everyone would be jumping on the bandwagon and taking up day trading at their leisure.
If you have the time and motivation to get started with day trading, you’re only going to be successful if you have access to information that others do not. You need to be one step ahead of the other traders and find and sell the best trades out there before they beat you to it.
Do you want to get started with day trading today, but already want access to that exclusive information? Don’t fret. Here are six day trading secrets you didn’t know that you can use in your arsenal today.
1. You Need to Have a Daily Stop Loss
Being a day trader can be incredibly risky. Even if you have hundreds of thousands of dollars in your portfolio, a few bad moves can cause you to lose it all. When day trading, you should never act on impulse, but instead, take smart risks. So, what is a smart risk? A daily stop loss.
A daily stop loss is the amount of money you are willing to lose when you’re day trading on a daily basis. It is also the amount of bad trades you are fine with taking before you call it quits. For example, you can tell yourself, “If I lose $10,000 today, I’m done.” Then you step away from the computer and hope you’ll recover by the next day. Or, you can say, “I’ll stop if I lose five trades in a row.” If you’re losing so much, perhaps you’re not in the right mindset to keep trading. It’s much better to take small hits and keep coming back every day, rather than losing it all at once because you didn’t put a limit on yourself and have control.
2. You Need to Know a Risk Percentage to Take
While some day trading experts say you shouldn’t risk more than 5% of your portfolio, others say to stick to the 1% rule. The fact of the matter is that it depends on your level of comfortability, how much you are willing to lose, and how much is in your portfolio. A healthy range is between 1% to 5%.
Perhaps when you start out, you begin at 1%, and then as you become a smarter investor, you go up to 5%. As long as you never exceed that, you should be fine. Don’t risk more than that on some trade because you may be wrong, and lose a large chunk of your change in an instant. You’re in this for the long game, not for the get-rich-quick scheme so many others fall prey to.
3. Look Into Forex, Options, and Futures
When you hear the word day trading, you likely think of stocks. But the truth is that expert day traders trade much more than your average stock. They also trade on the foreign exchange market (forex), which is the most liquid and biggest market in the world, and has a daily trading volume that adds up to more than $5 trillion. In addition to forex, you can also trade futures and options. If the stock market is having a bad day, and you want to diversify your portfolio a bit, trade the liquid and (sometimes) volatile futures, options and forex markets instead.
4. Day Trading Experts Think Logically, Not Emotionally
In your own financial portfolio, you may have stocks from Apple because you believe they are on the up-and-up, or you had a great experience with a customer service representative at the Genius Bar. Maybe you bought stocks in Walmart because you think nothing can topple their epic reign over the big-box retail market.
The fact of the matter is that the best day traders out there don’t rely on their hearts and emotions when deciding what course of action to take next… no matter how Hollywood depicts them. The good traders don’t have epic meltdowns in the middle of a trade. They also don’t buy stocks or invest in companies because they have an affinity for these businesses. They stop themselves short before they lose too much money, instead of acting like gamblers and getting addicted to the idea of becoming rich overnight. This is their livelihood, and they are in it for the long-haul.
When you’re day trading, you need to stay calm, think about how you’re going to protect your assets, and maybe make a little bit of money today. Don’t go after those highs, or trade based off emotions, because you’ll be doomed to hit the lows.
5. The Scalping Strategy Can Result in Big Wins
The scalping strategy, which many day trading experts do on the stock and forex markets, involves coming up with buy and sell targets before starting for the day, and then keeping in line with these targets throughout the course of the day. You buy and sell your trades and currencies by holding them for a short amount of time and getting rid of them if they seem to be going downhill. Trades occur in just a few seconds, which requires traders to be on top of the ball and glued to their monitors at all times. If you make many of these small trades throughout the day, and you’re wise with how you go about them, you will see that they add up to a nice chunk of change when you clock out.
Since the scalping strategy goes so fast, and you have to be completely focused on your day trading in order to be successful with it, you really have to rely on your logic instead of your emotions for this one.
6. Use the Momentum Trading Strategy
Some day trading experts like to use the momentum trading strategy. But what exactly is it?
With momentum trading, you invest in a stock that is going up in the moment, rather than investigating the particular details of a company and looking at their overall financial picture. Trades can happen in seconds and require extreme focus. Typically, when you are doing momentum trades, you’ll have a tab open on your browser from a reliable news source, and you’ll refresh it to see how certain companies are doing.
For instance, let’s say Elon Musk puts out a video that shows Tesla has invented the first flying car. You can bet that Tesla stock is going to soar immediately. You wouldn’t look at the particulars of the video or do deep research into Tesla. Instead, you trade for it immediately. You have to act fast if you want to win big, after all. If you’re concerned, you can always put that daily stop loss in place to protect yourself.
Day trading can take years to master. It requires a lot of time, energy, and dedication to master. You can’t casually take it on and expect it to make you hundreds, thousands, or even millions of dollars up front.
However, if you have the right information in your back pocket, and you are devoted to learning, you can be successful with day trading. All you need is practice and the willingness to be open to advice from experts.
If you are interested in getting started with day trading, or you want to learn more, subscribe to Nova-X Report. You will find out even more day trading strategies and tips that are hidden from the general public, and discover how you can bulk up your investment portfolio in no time. What are you waiting for? Subscribe today.