Day Trading Strategies

In a best case scenario, monies used for any type of trading should be considered discretionary income which in essence is money you can afford to live without.

Individuals who sit in front of a computer all day long, looking at stock after stock, is referred to as day trading and these individuals need to be aware of the rules for day trading.

Day traders have the ability to utilize a unique tool known as a ‘demo trade’ platform which enables a day trader to ‘practice day trading’ prior to risking a cent of their valuable trading capital. A ‘demo trade’ platform allows day traders the opportunity to place ‘demo trades’ on stocks of interest, based on the actual amount of trading capital that will be used by the day trader, when they are live day trading. Demo trading’ does allow the day trader the opportunity to familiarize themselves with their trading platform, learn the best route to enter trades, learn the best route to exit trades, learn to control stop losses and learn to read charts. Successful demo trading consists of only utilizing the amount of capital that will be used, when switching to live day trading. It makes no sense for a day trader to demo trade with a million dollars for example, when they will be using much less than that, when they switch to live day trading.

The key to successful day trading is developing a successful trading strategy. A potential day trader needs to decide, how much money they can reasonably expect to make, on a daily basis. Foolish wanna-be day traders shoot for the moon for their daily profit goal then, cry their eyes out when they fail to hit that profit goal, on a consistent basis. Simply put – day trading is not a get rich quick scheme. Profit goals should be realistic. When setting realistic profit goals, day traders are more apt to continue with their follow through for their day trading strategies. When a profit goal is out of reach, inconsistently or even rarely hit, the day trader is less likely to stick on the path toward that goal and take more riskier trades in attempts to make the money back that was lost on poorly developed trading strategies.

Simply put, take as much time in demo-mode that you need until you perfect a successful trading strategy. While demo-trading is no comparison to live trading and actual market moving action, it can help you develop a trading strategy to suit your own trading style and personality, if you are willing to devote the unlimited time it takes.

Test demo-mode trades by the number of shares to trade based on the amount of trading capital you are willing to risk on any one trade, don’t overshoot. Develop trading strategies for the number of shares traded depending upon share price, average trading volume and volatility of any one particular stock. You wouldn’t have the same trade management on 5000 shares of stock priced at $400 as you would on a trade of 5000 shares of a stock priced at $10, now would you? Just as you wouldn’t run with the same stop loss for a 5000 share trade compared to a 100 share trade, these are all part of your trading strategies.

Lastly, layout your own trading path by testing a variety of trading strategies of your own, not of someone else. No two traders are the same. Take your time, profits will come with patience.