day trading strategy

Learn how to day trade online with our day trading for dummies guide. There are six things every beginner should know before starting day trading stocks. Everything you need to know about how to get into day trading is going to be revealed through this day trading for beginner's guide.

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In this day trading tutorial, we’re going to give you five-day trading tips that will teach you how to day trade stocks. Day trading is a legitimate business career that can give you the freedom from your regular 9 to 5 job. The most important thing you need to know to succeed is to first start learning the day trading basics.

We created this day trading for dummies guide so you can avoid the most common mistakes novice traders tend to make.

So, you want to learn how to start day trading?

Let’s first start by answering the most basic question: What is day trading?

See below:

What is Day Trading?

day trading

Day trading is the act of buying and selling a financial instrument within a single trading day.

Basically, 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 daytrading.

Pretty simple, right?

The 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.

The day trading strategies are opposed to long-term trading strategies. They are exalted to be the best way to get rich quick. But we also have to remember the dire risks that come with daytrading.

Deciding which style of trading is better, day trading or long-term investing comes down to more than just your preference. Even if you learn day trading, we’re going to reveal why you can still fail if you don’t have the right approach.

There are a million ways to skin a cat, and there are many different schools of thought on how to trade the stock market. This raises up a very difficult question, like who should day trade the stock market?

See below:

Who Should Day Trade?

how to day trade

The way to make a profit in any market (stocks, Forex, commodities, cryptocurrencies) is to really find a trading style that suits your personality. The bottom line is that some people simply have a natural skill set that is more suitable for day trading than others.

Being successful as a day trader requires a lot more than just a good day trading strategy you also have to have:

  • The mental discipline
  • Quick thinking abilities
  • Able to work under tremendous pressure

If your personality doesn’t match your trading style, you can end up in a very messy situation. For example, if you’re a slow thinker, you’re not suited for day trading, but your personality may lead you to become a swing trader. 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.

Daytrading also has regulatory ramifications in the sense that the FINRA only allows 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?

Are you truly cut out for this?

If you fill in all the requirements outlined in this section, you’re lucky. You can start making a career as a day trader, but first, make sure you learn the right way how to day trade.

If you’re not cut for this and you don’t want to lose your retirement savings, you can always use a social trading platform to copy a professional day trader.

Why Day Trading Over Other Practices?

what is day trading

So, what are the advantages of day trading?

  • No overnight risk of holding the stock.
  • You can take advantage and make money when the stock is rising and the stock price is falling.
  • You can use an additional margin. The use of leverage and getting in and out of the market within the same day is what makes day trading stocks so alluring.
  • There is no need to perform detailed research about the company’s fundamentals since you’re only speculating on the day to day price fluctuation.
  • You can make a lot of money really fast.

These are just a few of the advantages of day trading that should motivate you why day trading is a good approach to trade the financial markets. You may also be interested in our guide on day trading ETFs.

But you still need to learn how to day trade in a way that will give you consistency. And secondly, it has to make sense.

When it comes to day trading for a living, you can follow our receipt for success.

See below:

How to Day Trade Stocks

day trading

Learning how to day trade involves more than just picking good day trading stocks. There are some vital rules for day trading stocks that you need to follow.

To keep things simple through this day trading for beginners guide, we have developed the three P rules that are worth knowing about:

  • Planing – You need to develop your own winning day trading plan, otherwise, you’re planning to fail. It’s important to have a personal map for a trade because there are many storms you can experience when trading.
  • 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 day trading plan ready, have the patience to stick to your rules.

Basically, you need to know, when to day trade, what time of the day to day trade, what day trading stocks are the best to tackle and what day trading strategies to employ.

If you can master the discipline to be patient and follow your daytrading 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 what’s the best time to day trade?

See below:

When Are the Best Times for Day Trading?

how to day trade

So, what is the best time for day trading?

The stock market has the tendency to produce most of its price movements during a specific time 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.

In this regard, it makes sense to only chase stocks during the first and the last regular market trading hour.

Now, you have the mindset of a calculated sniper ready to patiently wait for the best shooting opportunities.

There is one more thing left for you to complete your learning about what is day trading. If you want to bring your game to the next level and approach day trading the right way you need to learn how to day trade stock using a chart.

How to Day Trade Stocks

what is day trading

There are two types of stock analysis: fundamental and technical analysis.

And, in order to find potential day trading stock opportunities, you need to focus on chart-based technical analysis. You only need one good price action pattern that repeats every day to become a successful day trader.

Our team at Trading Strategy Guides has put together the most comprehensive guide to different 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 over time the same pattern, the chances are that the stock will continue to develop 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 whether there is a pattern on the stock chart or not, the chances are that this is not a tradable stock pattern. You need 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 big probability to see some follow-through. To best way to day trade breakouts is to wait for a close above the resistance level before you go long and a close below the support level before you short sell the stock.

See stock chart below:

how to practice day trading

Day trading breakouts is 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 start how to day trade stocks and grow your account.

Ready to get started? Be sure to read this guide on the best day trading platforms.

Final Words – How to Day Trade

Day trading requires intense focus and if you learn how to day trade the right way, you can attain financial independence. Once you create a profitable day trading plan you’ll be able to spot repetitive and profitable stock chart patterns. You can accomplish all of the above through our trading resources and trading guides that are so popular here on the TSG website.

Before you develop your own day trading strategies, make sure you have each point covered through this article before you risk any of your hard-earned money. With the S&P 500 reaching new all-time highs almost every day, there’s never been a better time to start day trading stocks for a living.

Finally, we hope that this day trading for dummies guide will get you started in the stock market.

Thank you for reading! Also, read our guide on day trading penny stocks.

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With over 50+ years of combined trading experience, Trading Strategy Guides offers trading guides and resources to educate traders in all walks of life and motivations. We specialize in teaching traders of all skill levels how to trade stocks, options, forex, cryptocurrencies, commodities, and more. We provide content for over 100,000+ active followers and over 2,500+ members. Our mission is to address the lack of good information for market traders and to simplify trading education by giving readers a detailed plan with step-by-step rules to follow.