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(29-1-2015 LiveBombayStockExchange day trading strategy series) - When a person thinks about day trading the first picture that comes to mind is a person sitting in front of 3-4 computer screens, tracking stock movements through out the day and making purchase and selling decisions based on the movement of stock markets. One has to remember that indulging in
day trading is indeed a very risky affair.
A person who is new to stock markets should first complete his home-work of getting familiar with working of stock markets. Then he should initially start with some good analysis and should not follow the stock market analyst who flood the business news channels on daily basis. He should devise his own investing strategy and should rather refrain from entering the domain of day trading.
A person should start putting money in day trading only when he feels that he has gained enough of experience in stock market investing, has devised and implemented a very good stock investing strategy. I would explain the DO's of day trading in this post.
1.Understand Stock markets: It may look strange but globally stock markets operate in a pattern through out the year. generally Indian stock indices rise substantially during the festive season quarter ie around diwali time. Similarly global stock markets rise during the christmas quarter. Investor should always be familiar with stock market trends and movements. Purchasing a stock before the festive quarter and selling it as the results for the quarter are announced is a very good strategy used by short-time investors. If one wants to start doing day trading then he should first understand how stock markets work and understand stock market trends diligently.
2. Always trade using risk money As I told before, day trading is a very risky affair to handle. hence a person should limit his budget for da trading to his risk taking ability. He should put only that amount of money in day trading which he can risk, making sure that his personal/social monetary commitments are not affected even when he looses the money. In case he makes money from day trading then he should transfer the profits to some other bank account and ensure that he never crosses the budget and never get too tensed about the losses incurred. This would help a lot and would keep a person mentally stable in tough times during stock market crashes.
3. Set your trading goals and limits: There is lot of home-work which one needs to complete before entering the day trading market. A person should have a efficient trading plan and should adhere to it diligently. Any stocks which donot fall into expectations of this plan should not be traded at any cost as it can lead to losses in future.
4. Spare money for Quality trading software: Doing day trading is not a cheap activity, It comes at a cost and a person needs quality trading software on rent or lease. These softwares come at high cost and you need to keep seprate budget for upgrades and softwares needed for performing all the analysis on a particular company stock price movement.
5. Don't buy using emotions: One very important aspect for minimizing losses in stock markets is that a person has to keep emotions at bay while making any purchase of stock. Emotions have no role to play while choosing a stock. It is all analysis power. Follow your coach initially before venturing out alone.
6. Don't put your trading profits at risk: Another important strategy while doing secured Day trading and minimising money exposed to losses is to keep the profits out from reinvesting. Donot invest profits you earned in day trading back into it. In simple words it is reiteration of the second point that says 'donot cross you risk absorbing monetary limit. Put your profits in FD in bank and you will get secured increase in profits from the interest gained over time, which can become substantial amount gradually.
7. Learn the art of cutting losses: One of the most important strategy in day trading which every day trader should devise is to learn the art of cutting the losses. Make a stop loss selling point for every daily traded stock. Donot hold the stock if it has moved below the stop loss value instead you should sell this stock immediately. In this way you would cut your losses and would keep losses in a check.
I hope these lucky 7 strategies for doing day trading are now some-what clear to most of the readers, these would surely help you in long run especially while designing your own investment plan for day trading.
Do share this article! press the like button on the right ->
HAPPY DAY TRADING!!
day trading is indeed a very risky affair.
A person who is new to stock markets should first complete his home-work of getting familiar with working of stock markets. Then he should initially start with some good analysis and should not follow the stock market analyst who flood the business news channels on daily basis. He should devise his own investing strategy and should rather refrain from entering the domain of day trading.
A person should start putting money in day trading only when he feels that he has gained enough of experience in stock market investing, has devised and implemented a very good stock investing strategy. I would explain the DO's of day trading in this post.
1.Understand Stock markets: It may look strange but globally stock markets operate in a pattern through out the year. generally Indian stock indices rise substantially during the festive season quarter ie around diwali time. Similarly global stock markets rise during the christmas quarter. Investor should always be familiar with stock market trends and movements. Purchasing a stock before the festive quarter and selling it as the results for the quarter are announced is a very good strategy used by short-time investors. If one wants to start doing day trading then he should first understand how stock markets work and understand stock market trends diligently.
2. Always trade using risk money As I told before, day trading is a very risky affair to handle. hence a person should limit his budget for da trading to his risk taking ability. He should put only that amount of money in day trading which he can risk, making sure that his personal/social monetary commitments are not affected even when he looses the money. In case he makes money from day trading then he should transfer the profits to some other bank account and ensure that he never crosses the budget and never get too tensed about the losses incurred. This would help a lot and would keep a person mentally stable in tough times during stock market crashes.
3. Set your trading goals and limits: There is lot of home-work which one needs to complete before entering the day trading market. A person should have a efficient trading plan and should adhere to it diligently. Any stocks which donot fall into expectations of this plan should not be traded at any cost as it can lead to losses in future.
4. Spare money for Quality trading software: Doing day trading is not a cheap activity, It comes at a cost and a person needs quality trading software on rent or lease. These softwares come at high cost and you need to keep seprate budget for upgrades and softwares needed for performing all the analysis on a particular company stock price movement.
5. Don't buy using emotions: One very important aspect for minimizing losses in stock markets is that a person has to keep emotions at bay while making any purchase of stock. Emotions have no role to play while choosing a stock. It is all analysis power. Follow your coach initially before venturing out alone.
6. Don't put your trading profits at risk: Another important strategy while doing secured Day trading and minimising money exposed to losses is to keep the profits out from reinvesting. Donot invest profits you earned in day trading back into it. In simple words it is reiteration of the second point that says 'donot cross you risk absorbing monetary limit. Put your profits in FD in bank and you will get secured increase in profits from the interest gained over time, which can become substantial amount gradually.
7. Learn the art of cutting losses: One of the most important strategy in day trading which every day trader should devise is to learn the art of cutting the losses. Make a stop loss selling point for every daily traded stock. Donot hold the stock if it has moved below the stop loss value instead you should sell this stock immediately. In this way you would cut your losses and would keep losses in a check.
I hope these lucky 7 strategies for doing day trading are now some-what clear to most of the readers, these would surely help you in long run especially while designing your own investment plan for day trading.
Do share this article! press the like button on the right ->
HAPPY DAY TRADING!!
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