Day trading is probably the most popular trading strategy among individual investors. Daily fluctuations of the exchange rates and an opportunity to use a multiplier makes it possible to trade currency pairs, stocks and other assets on a daily basis. However, even the best trading strategy will deliver worse than expected results if applied incorrectly. Here are the top five tips to improve your day trading skills.
Know yourself
Forget about the market, currency pairs and technical analysis indicators. At least, until you understand what kind of a person you are. Become self-aware and determine your risk tolerance, as well as preferred modus operandi. It may seem obvious but different people trade differently. What works for your fellow trader will not always work for you. Remember that you are not trading to make this one deal close in the green, you aim at generating stable returns over time. And that’s where your personality will show itself.
During this step you also want to set your goals and priorities. What would you like to achieve with trading and what are you ready to sacrifice? Visualize your goals and come up with ways to achieve them. Take a step back and reevaluate everything you are doing.
Basics first
After completing the first step, move on to the Forex basics. You don’t want the expert stuff, not yet. Learn it bit by bit, start with simple things and gradually work your way up to the top. Only trade with currency pairs and tools you understand. There are many Forex-related materials out there and it is really easy to get lost. Avoid jumping from one source to another as it will make you confused and disoriented. Stick to a limited number of sources.
Do NOT go against the market
At least, until you understand exactly what you are doing. Those who believe they can double-cross the market usually turn out to be wrong. They are also doomed to lose their working capital. Instead, go with the market: rely on strong market moves and let the trend do its work. Not only this way is more sustainable, it is also less stressful and emotionally demanding.
Educate yourself
Trading does not come without risks. Most people hate losing money, yet without the slightest doubt stake their entire capital on one particular deal, sometimes not even understanding the terms. That’s not the path you want to follow. Trading is not gambling, and professional traders do not rely on luck.
Foreign exchange is all about risk management and probabilities. Only by educating yourself can you manage the risks involved in each particular deal and at the same time increase chances of turning trading into a productive hobby.
Stop believing in magic
There is no single magic trick that will turn your initial $50-dollar investment into a billion overnight. Day trading, just as any other professional occupation, requires knowledge, hard work and patience. Be prepared to lose some money, especially during the initial phase of your trading journey. What is even more important, be prepared to work hard.
Snake oil strategies and ultimate robot tools will eventually make you lose money, even if they seem effective in the very beginning. Concentrate on boosting your professionalism and knowledge instead.
