If you’re in the trading industry and you have no idea what Day-Trading is, we have news for you: You’re probably a Rookie. After all, day-trading is an activity that many professionals and money managers choose to stay away from. It’s a game that only hardcore veterans know how to play.
But how does not knowing day-trading make you a rookie exactly?
What is Day-Trading?
Day-trading is the activity of buying and selling securities on the same day. It’s not a long term investment, in fact, it’s not an investment at all. The most common playgrounds of day-trading are the forex and stock marketplace. With their insights, knowledge, and strategic thinking, day traders can exploit the highly liquid currency and stocks, feeding on the small price movements.
Why Day-Trading Is Not For Rookies
There’s a lot of dispute about day-trading. Some jump right into it based on what they’ve heard, thinking they can just start making tons of money right away. Others argue that it risks far outweigh its profit potential. However, there’s no black and white in this equation, it all depends on your skills and whether you’ll be able to survive.
Having said this, it’s clear that it’s no game for rookies. And here’s why:
1. Rookies think it’s an easy game
Rookies expect they’ll start earning lots of money as soon as they start day trading. Veterans, on the other hand, know that sometimes they’ll take some losses before they start winning, and that’s alright.
2. They jump into it unprepared
They usually lack the full insight and knowledge to make an informed decision, acting primarily on unverified tips they found on their way. The pros know very well that when the information is from an unverified source they’ll be in for a bad trade, and they know better.
3. They fall victim to Margin Trading
They might have heard about margin trading and how it can amplify their profits, but what they don’t realize is that it also amplifies the losses. Having a large amount of borrowed money is not a good idea to start if you don’t know how to win.
4. They think of it as a side job
Day-trading is not something to be played on the side, it needs full focus and commitment throughout the whole day to ensure success. If you believe it’s easy to do on the side with your daily work, you’re still a rookie.
Day-Trading 101: From Rookie to Pro
Everyone starts a rookie at some point, but they’ll never be able to compete without certain secrets. Day trading secrets have been handed over the years, from a veteran to the next generation. If we got you interested in day-trading, we’ll let you in on our secrets too.
To become a Pro, you need to:
1. Be a “Know-It-All”
You need to be very well educated and informed, with up-to-date knowledge about the forex, stocks, future, and marketplace options. Knowledge is key in this game.
2. Stay Grounded
Avoid letting your heart run you at all costs, stay grounded and always take your decision based on logic and rationale. Set aside personal preferences and let the numbers and facts guide you instead.
3. Know When To Stop, and When to Risk
Sometimes it happens, you keep getting losses in a row. But instead of going for that “just one more and I’ll win”, you need to know when it’s time to exit. Putting a certain limit per day will help you know when you’ve reached the quitting point. You also need an escape plan in case things go south in the middle of a deal.
4. Follow Strategies
The pros have some strategies they can swear by, and it’s always a great idea to adopt some of them. Look into the Scalping, Fading, Daily Pivots, and Momentum strategies and understand how you can use them to win.
Day-trading is no easy activity. It’s full of risks and danger, and it’s definitely not for rookies. If you want to start playing, you need to know first what not to do when day-trading and avoid that at all costs. Afterwards, you’ll study the ways of the veterans and how they do it. And only then, when you’ve gained the needed knowledge, insights, expertise, and strategies, will you be ready to play with the pros.