How to Become a Successful Day Trader

2 Mar 2020

Trading in simple language is to buy at low prices and sell at high in short term duration to earn profit. In terms of stock market, purchasing and selling of shares or stocks of a company by predicting their direction in future based on technical evaluation or market trend for short term is called trading.

The dissimilarity between investor and trader is investors invest money for long term and wait for the bull run to make benefit while trader tries to make gains even in bad market circumstances.

Trader can often make more money than investors hence many people try this trick to make more money. However, since the risk in trading is much higher than the risk in investing, people fail. Trading is a mind game. To become a successful trader, a person must take care of several things.

When anyone wants to trade, they need a broker who executes the trades on the market. The broker they opt for is an essential investment decision. India presently has around 70 brokers to option between. However, there are numerous top global brokers too.

What to look at while choosing a broker?

Below are some ideas to look at when choosing a broker:

• Speed of execution – Due to the high number of trades a day trader might make in a day, the speed of execution should play a factor.

• Costs – The lower the fees and commission rates, the more profit they take home, and many will reduce their commission the more they trade.

• Regulatory compliance – Make sure that the broker is regulated. They'll be legally obliged to protect their financial interests.

• Spreads – As a day trader, a person must demand competitive spreads. Find brokers with tight spreads and their bank balance will thank them for it.

What Can Be Traded? -

• Forex – The foreign exchange currency market is the most popular and liquid, globally.

• Stocks – Physical stocks in individual companies, regular and Leveraged ETFs (an “Exchange Traded Fund” holds multiple stocks or commodities and is traded like a single stock), futures, and stock options. They can buy and sell in the shares of ICICI Bank, for example, India's largest privately-owned financial institution.

• Binary Options – The easiest and most predictable technique, as the timing and return on a successful trade are known in advance.

• Futures - The future price of a commodity or security.

• Commodities – Oil and natural gas, foodstuffs, metals, and minerals

Day Trading Outside India

If an equity trader wants to branch out from India’s National Stock Exchange or Bombay Stock Exchange, they can also trade in other global markets. If they are trading in S&P 500, for example, they will be buying and selling the shares of companies, such as Starbucks and Adobe.

In the day trading forex market, they will be trading currencies, such as Indian Rupees, US Dollars, Euros, and GBP. In the futures market, often based on commodities and indexes, they can trade anything from gold to cocoa.

Index funds rapidly occur in financial advice these days but are slow financial vehicles that make them unfavorable for daily trades.

Another growing part of the interest in day trading world is digital currency. Equity trading with Bitcoin, LiteCoin, Ethereum, and other altcoins currencies is a widening business. With lots of volatility, able eye-popping returns, and an unpredictable future, day trading in the cryptocurrency could be an exciting avenue to pursue.

Day Trading Strategies for follow in 2020

Traders can employ day trading strategies in forex, futures and anything else they’re trading in, to give them an edge over the market. There are several day trading methods out there, but all will rely on accurate data, carefully laid out in charts, tables, and spreadsheets.

These day trading strategies include:

• Swing trading

• Scalping

• Trading zones

• Trading on volume

• Arbitrage trading

• A simple day trading exit strategy

• Utilizing news

It is those who stick religiously to their trading strategies rules and parameters that often seize a slice of the daily turnover in the Indian National Stock Exchange.

However, a trader must always remember that day trading is a highly tricky and dangerous zone. A trader should not invest money he cannot afford to lose since markets are volatile and can result in corrosion of the entire invested capital. It is always better to get your risk profile analysis done from a certified investment advisor before investing in the markets.

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