Day trading is something that many people want to do, but due to the real possibility of losing money, many avoid it at all costs. The good news is, there are some tips that can be used to help take some of the risk and uncertainty out of the process. Keep in mind, there are no guarantees, but having some tips from those who understand the process can go a long way in helping someone new to day trading find success.
Only Trade Stocks that are Over $30
A cheap stock is going to continue to get cheaper. In some cases, traders appreciate the idea of being able to trade more affordable stocks because they hope for higher returns. However, they have to remember all the inherit risks associated with trading cheaper stocks, the possibly volatile swings and the high commissions.
Don’t Fade Gaps
Yes, gaps are going to get filled. The question to consider is, will the gam get filled in the timeframe that a person needs it to. If the individual is working in day trading breakouts, they need to make sure things are happening precisely and quickly. They don’t have the time to wait for the stock to begin acting the way it should. Remember, when it doubt, it is always going to be easier to go along with the trend.
Avoid any Stock that is Down or Up over 5 Percent
It is never a good idea to become involved with a 10 percent move or 50 percent retracement. That is a total of five percent.
Only Trade Stocks with a Minimum of $2 price Range from the Previous Day’s Low or High
The goal is to day trade breakouts. The higher the recent trading range, the better a person’s odds are to be in a stock that has room to trend. This is a factor that professional brokerages can help a trader better understand.
When it comes to day trading, there are several factors that need to be kept in mind. Don’t jump in without being informed, as this will not play out well in the end. Also, check out the LinkedIn profiles of successful day traders to see what they are doing.