Learn how to day-trade online with our Day Trading For Beginners Guide. There are six things every beginner should know before beginning their day trading journey. Everything you need to know about day trading is going to be revealed through this day trading for dummies guide.
There will be 6 secret tips in this article, and some of them have been compiled by the best traders that I have met and learned from. Which is one of the secrets! Learn from the best of the best, I do this by interviewing them on the How to Trade It Podcast.
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In this day-trading tutorial, we’re going to give you 6 day-trading tips that will teach you how to day-trade stocks. Day trading is a legitimate career that can give you freedom from your regular 9 to 5 job. We created this day trading for dummies guide, so you can avoid the most common mistakes novice traders tend to make.
Make sure to also check out our Forex day trading strategy article as well!
We’ll dive into day trading for beginners’ basics, plus more advanced strategies.
Let’s start by answering the first basic question: What is day trading?
Table of Contents
Day Trading For Beginners: 6 Secrets
- Make a Commitment
- Get a Plan and Strategy
- Pick a Market to Trade
- Learn From the Best
- Risk Management is foundational to success
- Day trading is about self-mastery
Those are the 6 secrets you need to know to master day trading. We are going to go into detail about each one.
Day Trading For Beginners Guide: What is Day Trading?
This day trading guide defines day trading as, the act of buying and selling a financial instrument within a single trading day.
Whenever you open a trade with the intention to take advantage of small intraday price fluctuations and close that trade within the same trading day, you’re engaged in day trading.
Pretty simple, right?
The only thing you have to remember is that if you close your position before the market closes, you’re a day trader.
Eg: If you buy and sell Bitcoin within a single trading day, you’re day trading Bitcoin.
Many successful traders use day trading strategies as opposed to swing trading strategies or long-term trading strategies. They are considered as one of the best ways to make money quickly. But, we also have to remember the risks that come with day trading.
Deciding which style of trading is better, day trading or long-term investing comes down to more than just your personal preference. There are several key factors, like mental discipline, and your ability to act under pressure. It’s also important to remember that you can still fail if you don’t have the right approach.
You may be asking yourself, “Should I day-trade?” In the next section, this day trading for beginners guide will cover the core traits you need to become a successful day trader.
Day Trading For Beginners: Who Should Day-Trade?
Wondering if you should day trade? The way to make a profit in any market (stocks, Forex, commodities, cryptocurrencies) is to find a trading style that suits your personality. Some people have a natural skill set that is more suitable for day trading than others.
If you want to know who should trade the answer is simple.
Those who make a commitment.
Trading isn’t getting rich quickly, and it isn’t gambling (or at least shouldn’t be treated as such). If you plan on being a success in trading, make a solid commitment and go for it. Commit to the long road ahead and commit to doing whatever it takes to be successful because it is going to take a lot of effort to climb the mountain of successful day trading.
Becoming successful as a day trader requires a lot more than just a good day trading strategy. You also have to have:
- Mental discipline.
- Quick thinking abilities.
- The ability to work under tremendous pressure.
If your personality doesn’t match your trading style, you can end up in a risky situation. For example, if your trading style is to move at a slower pace, you may not be suited for day trading. You will be better suited to swing trading. Basically, you need to understand your trading time frame personality.
Veteran trading psychologist and bestselling author Brett Steenbarger discovered that trading success means focusing on your personality strengths.
Another thing to remember is that day trading also has regulatory ramifications. FINRA will only allow you to engage in this form of trading if you have at least $25,000 in your account. This is also known as the PDT rule (Pattern Day Trading).
So, should you try day trading?
If you have more than $25,000 in your account and operate well under pressure, day trading is a good option. It depends on your trading personality, risk tolerance, and financial liquidity.
If you’re lucky, you fill in all the requirements outlined in this section. You’re one step closer to making a career as a day trader. Now, you need to learn the right way to day trade. For those of you who don’t meet the requirements or don’t want to risk your retirement or savings, you can always use a social trading platform to copy a professional day trader.
Also important to note is that day trading is for people who hate overnight risk. Some people hate overnight risk and therefore always close their trades before the market closes so they can sleep soundly at night. If you hate market overnight risk then you should definitely consider becoming a day trader.
Day Trading For Beginners Benefits
So, what are the benefits of day trading for beginners?
- No overnight risk of holding the stock.
- You can make money both when the stock price is rising and when the stock price is falling.
- You can use an additional margin. The use of leverage and fast market entry and exits make day trading stocks alluring.
- You don’t have to perform detailed research about the company’s fundamentals. You are only speculating on the day-to-day price fluctuation.
- You can make money quickly compared to long-term trading.
These are just a few of the advantages that day trading has to offer. This day trading guide should motivate you as to why day trading is a good approach to trading in the financial markets. You may also be interested in our guide on day trading ETFs.
Next, we need to learn how to day trade stocks in a way that will give you consistency.
If you’re interested in day trading for a living, this 3 step process will teach you how to day trade stocks with success.
Best Day Trading Guide — How to Day Trade Stocks
Learning how to day-trade involves more than just picking the best day trading stocks. It requires a system of planning, practice, and patience. Here are some core principles you need to follow when getting started with day trading.
Rely on the “Three P’s” Rule:
- Planning – You need to develop your own winning day trading plan, otherwise, you’re planning to fail. It’s essential to have a personal map for your trades because there are many storms you can experience when trading. You can find the best strategy by looking at our guide on getting a strategy to get started.
- Practice – An essential piece of your trading toolkit should be to practice your strategy until you master the game of day trading. After all, repetition is the mother of all learning.
- Patience – Once you have your trading plan ready, have the patience to stick to your rules.
You need to know when to day trade, what time of the day to trade, which day trading stocks are the best to tackle, and which day trading strategies to employ.
If you can master the art of patience and follow your day trading rules, it can be a real game-changer for your trading.
If you really want to improve your success rate and further optimize your strategy, you need to know the best times to day trade.
When Are the Best Times for Day Trading?
So, what is the best time for day trading? The best times for day trading are during the first and the last regular market trading hours, between 9:30 – 10:30 AM EST and 3:00 – 4:00 PM EST.
The stock market has the tendency to produce most of its price movements during specific times of the day.
It’s well-documented that the stock market is the most volatile during the first hour of the trading day (9:30 – 10:30 AM EST) and the last hour of regular market trading (3:00 – 4:00 PM EST). These are often referred by the pros as the power hour stocks.
A day trading strategy can’t survive without volatility. Volatility is the life and breath of any successful day trader.
Now, you have the mindset of a calculated sniper ready to patiently wait for the best trading opportunities.
There’s one more thing left for you to complete your education about day trading. If you want to bring your game to the next level and approach day trading the right way, you’ll need to learn how to day trade stocks using a chart.
Markets for Day Trading
One thing you must do is pick a market for your day trading action. You can day trade stocks, or options, then there is futures day trading for you to choose from. Additionally you can look into day trading Forex and Crypto.
Whatever market you choose it is my personal recommendation that you choose one of type of market and just focus on that. There are benefits to each one do some reasearch make a decisoin and go for it.
We have created some great day trading strategies that you can learn and apply to help you in your journey.
We have a Forex Day Trading Strategy – check this out and learn it well if you want to day-trade Forex. We have also created a free trading strategy that helps traders get started in day trading cryptocurrency.
Day Trading Guide – Price Action and Chart Patterns
Day trading strategies typically rely on two types of stock analysis: fundamental and technical analysis.
There are several key strategies that you can deploy when day trading. Let’s discuss a few of them here.
Scalping Day Trading Strategy
Scalping refers to getting in and out very quickly. This is a way to trade that takes a lot of focus and can be highly effective, it is usually done on a low time frame chart such as a one-minute chart. Also, traders need a high volume of trades to make money doing a scalping strategy. They get in and out in a few minutes or sometimes a few seconds. One of the key secrets to scalpers is that the candles often retrace, and you can get so many little scalps in one-minute time frames.
High volume is important for scalpers. They could even make trades as small as $10 and then if they do that 100 times that would be $1,000 a day. Not a bad day’s work if you know what I mean, this type of scalping (trading) can also be called high-frequency trading.
In order to find potential day trading opportunities, you need to focus on chart-based technical analysis. You only need to have one good price action pattern that repeats every day to have success as a day trader.
Day Trading Guide — Momentum Strategy
Another effective type of day trading strategy is momentum day trading. Momentum trading is when you observe price moving quickly then you make a trade attempting to take advantage of that move. This works well in a trending market or when price moves fast in one day. This type of strategy doesn’t not work well in a ranging or consolidating market.
See price burst and observe the power of a momentum trade. For the patient day trader they can find one good setup like this each day.
Our team at Trading Strategy Guides has put together the most comprehensive guide to different day trading chart pattern strategies. In order to understand the psychology of a chart pattern, please start here: Chart Pattern Trading Strategy step-by-step Guide.
If your favorite stock tends to generate the same pattern over time, chances are that stock will continue to follow the same pattern it has done in the past. That’s why we recommend studying historical stock charts to find repetitive patterns.
When you search for a day trading pattern only look for clean and easy price action.
If you’re having a hard time determining whether there is a pattern on the stock chart or not, chances are that this is not a tradable stock pattern. You need to look for predictable and reliable stock chart patterns to be a successful day trader.
For example, breakouts that occur during the first hour of regular trading hours and are accompanied by increased volume, have a very high probability of seeing follow-through. The best way to day trade breakouts is to wait for a close above the resistance level. You’ll also want to see a close below the support level before you short sell the stock.
See the stock chart below:
Day trading breakouts are an easy and clear pattern that takes advantage of the volatility generated by the break of these key levels. This is a good method to learn how to day trade stocks and grow your account.
Also, be sure to read this article on the best day trading platforms.
Final Words – Day Trading For Beginners Guide
Day trading for beginners requires intense focus. If you learn how to day-trade the right way, you can attain financial independence. Once you create a profitable trading plan, you’ll be able to spot repetitive and profitable chart patterns. If you need help, you can accomplish all of the above through our trading resources and trading strategies that are so popular here on the TSG website.
Before you develop your own day trading strategy, ensure you have each point covered through this article before you risk any hard-earned money.
Finally, we hope that this day trading for beginners guide will get you started on the right path in understanding financial markets.
Thank you for reading!
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Day Trading Beginner’s Guide PDF Download
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