4 factors that will make you a successful day trader

There are numerous day traders who dabble the market with the hope of making money by trying to cash in on the market’s unpredictable Behavior.

Rahul Jain:-    Day trading refers to a form of share trading where you buy or sell stocks within the same trading day. The motive behind this is to gain from small price fluctuations throughout the day. Since the settlement is done on the same day, this form of trading takes away the luxury of time where you could hold on to your stock(s) in case of a price fall, hoping it to bounce back in the coming sessions. There are numerous day traders who dabble in the market with the hope of making money by trying to cash in on the market’s unpredictable behavior

Create a trading strategy:-For the exercise to be rewarding, you must create a trading strategy. Basically, there are two distinct types of trading approaches – discretionary and systematic. The former entails making decisions based on the current factors such as internal and external, which you believe are going to make an immediate impact on the market. On the other hand, a systematic strategy deploys looking out for distinct signals for buying and selling, which is also known as rule-based trading. It is a systematic trading approach which includes back-testing using historical data along with a qualitative risk management system. 

Get yourself the right IT stuff:-For making the right calls and create wealth out of day trading, you need to have the right IT infrastructure. Since trading is completed within the same day, it is important for you to be on the top of your game and keep track of the market's every movement. Hence, it is crucial to equip yourself with a high-speed broadband internet connection and software that helps you visualize price, and analyse price charts in real-time.

Equip yourself with the required knowledge:-Lack of knowledge is a fundamental reason why most people fail in day trading. Arming yourself with the requisite know-how can help you make prudent choices. You must know the market terminology, and have a thorough understanding of how to analyse a stock including technical analysis, Price-to-Earnings (P/E) ratio, Earnings per Share and Price/Earnings-to-Growth (PEG) ratio, among others.

Allocate your capital wisely and avoid investing on borrowed money:-Since market movements are hard to predict even for the soundest investor, make sure to allocate your capital wisely. Instead of committing a lump sum, start small. Also, don’t invest on borrowed money as it can sour relationships and impinge on critical life goals. Investors often feel that by making the right moves, they can double their investment overnight through day trading. This is nothing but a myth.

Source by the Money Control