Referring to market positions that are held for only a short while, in online day trading, the investor or trader, will typical buy stock and sell it on the same day. It may seem complicated to understand and follow through, especially for beginners, but in actuality, day trading isn’t that complicated.
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Best Online Day Trading Techniques
The important thing before starting to trade is to learn some simple and rules based strategies that will help in anticipating market moves. Following are 4 secrets that every beginner should know before starting with online day trading.
Focus Your Entry Points on Scenarios Where Supply and Demand Are Severely Imbalanced
When it comes to financial markets, it won’t matter at all if there’s zero supply to speak of, the price will still go up if there are willing buyers. On the other hand, if there are no willing buyers but an excess in supply, the price will surely decrease. This is why, it’s important to keep an eye on this as any miscalculation could cost you dearly.
Before Jumping In Any Market, Be Sure To Set the Price
It’s probably a very good idea if you plan the profit that you want to make and also a stop-loss level, well in advance. This is especially important if you are thinking of buying in a long position, as such precautions will secure your position if the trade turns against you. Doing so will lower the potential loss that could have been incurred.
Always Set Your Targets to Risk-Reward Ratio of 3:1
In the case of stock trading, beginners must learn and understand the concept of proper risk-reward ratio before diving into online day trading in earnest. This strategy will allow you to ‘win big, but lose small’, and will make your record a good one, even if losses have been sustained on most of your trades. As you gain more experience, the risk-reward ratio can be set higher which will benefit you more.
There are some day trading programs available that offer a free demo that you can use to practice the risk-reward ratio before setting a target. While, 3:1 is the lowest ratio one could target, this can increase once the trader has enough experience.
Learn To Be Patient and Disciplined
One thing that sets successful day traders apart from the rest is that, they don’t trade each and every day. While they may stay at their computers and look for a good opportunity, they will not trade if nothing meets their criteria.
This requires patience and discipline, which is why it’s very important to have a trading plan and to stick to it. Impulsive behavior is one of the worst enemies of beginning day traders, which is why you should first plan your trade, and then trade your plan.
Online day trading is the most convenient, which is why many traders have switched from conventional trading methods to online trading. To learn more about the many trading platforms that you can use to become a successful day trader, visit ETX Capital today.