Electronic day trading has become increasingly popular among people. It is accessible to anyone wanting to venture in and can be a potentially lucrative source of income for home-based investors.
While day trading can be an easy way to earn a substantial amount of money in a short period of time yet it entails risks that you should be aware of whether you are considering to make a living off it or only dabbling in it. To fully appreciate the freedom through electronic day trading, you must know what you are doing. I strongly urge you to gain experience and learn the basics of day trading before even think of placing your first order. It's only common sense.
That being said, here are some points you should take into consideration. These points will help you build up a solid foundation for your future day trading career and avoid traps that several beginners do when starting out :
1- Professional electronic day traders want to get as many things stacked in their favor as possible prior entering a trade. The thing is they want to minimize the risk of a potential trade. To do so, they build up a check list of things to look for and memorize it. Every time they are about to place an order, they go through the list and make sure that their decisions respect some prerequisites and essential conditions they've set before. Most of the time, these lists are build over many years of experience. As a new electronic day trader, you don't have that much experience yet. However, there are many books out there teaching day trading that provide such list that you could pull off for your own use. You could also ask an expert electronic day trader to help you out with it and maybe to give you some advice on stock trading.
2- Make sure to understand how the different markets work. Most of the time, new day traders neglect the entire listed NYSE market and focus only on NASDAQ stocks because they think they are more profitable. While it's true that NASDAQ stocks are slightly more volatile, more profitable and thus more exciting, NYSE have enough volatility and volume to provide profitable day trading opportunities. Moreover, NYSE stocks are generally the easiest stocks to play, while NASDAQ stocks get tricky sometimes due to their volatility and intraday prices movement. Beginning day traders are recommended to play both markets.
3- A common mistake new traders make is to daytrade cheap $2-$10 stocks because of low starting capital. Stocks priced around $25-$60 are the best ones. Further, choose stocks having an intraday average trading range of 5% or better.
Education, experience and dedication are the key to thriving in the relentless electronic day trading world. Make sure you know what you're doing before investing too much of your money into trades that will likely be unprofitable in the long run.
Disclaimer: All information on this site is provided for informational purposes only! By no means is any
information presented herein intended to substitute for the advice provided to you by any health care or other professional
or organization.
