Day trading for dummies is not going to get you very far. There are some many different technical aspects of trading stocks that you really need to know what you are doing before diving in the deep end. Add to that the fact that the market moves increasingly faster these days and is much more volatile than it used to be.
Historically, investing in the stock market has proved to be successful when patience is exercised. Yet day trading is a different story as mentioned on Trade Ideas Promo Code. Everything happens in one day when day trading, most of the time. You do have to realize that you might end up keeping certain positions open, depending on the circumstances.
Maybe you think a particular stock is going to gain even more the next day. In that case, you could also opt to liquidate a portion of your position, taking profits and still leaving some meat on the bone for future gains. You could also sell your position and buy back in using a limit order. Then there are those times when you are losing money on a trade.
You definitely have to understand the risks of day trading and know how best to implement stop loss orders. Knowing when to cut your losses is certainly key as an investor. As a day trader, you are going to win some, and you are definitely going to lose some as well.
Putting too much of your money into one position is never a good idea. Diversification is just as important for the day trader as it is the buy and hold investor. That does not mean, however, that you will have a steady stream of say 7 open day trades consistently, for example. You are going to approach diversification from a few different angles.
Long-term traders are more easily able to calculate a consistent diversification. You need to understand diversification for day traders. Say that you have no open trades, and you are looking for your first one of the day. For starters, you are always crunching the numbers and looking for whichever move looks best.
Yet you are certainly doing this using a software program and stock screener. Say you find one and only one move to make for today. You do not have any open positions, and you are going to place one day trade. You have to determine how much money you want to invest in this particular company all at once, based on what you have seen.
Day trading is a science of sorts. You will need to determine the percentage of your portfolio that you want to put into this particular stock. Some people get too big for their britches and go all in or initiate a substantial position. You have to be careful.
You can get burned easily as a day trader. Guessing what a stock is going to do in a 24 hour period is much more difficult than buy and hold investing. That is why day trading is often only recommended for seasoned investors who have a substantial amount of cash.