For a long time, trading has been a popular hobby, and a way of living for some. During the pandemic, however, there was a surge in the number of traders. People were forced to stay at home and the amount of spare time grew larger for most.
As with many other services, a large number of trading platforms and brokers can be found just a simple Google search away. The two factors above combined – more spare time and easy access to the internet – are assumed to be the main reason behind the surge of traders in recent times.
The surge included trading in general, but day trading in particular became the choice for lots of people interested in the world of trading.
Research and Knowledge is Crucial
For the beginner, day trading can be quite tricky to get a hold of. It’s important for the one interested in this trading style to do their research before making the first trade. Today, doing the research is not very difficult. Online, you can find lots of day trading advice that might make you more profitable.
It’s important to remember that day trading is not magic. Sure, if you follow the advice given by experts, you get better prerequisites. But not even the experts can make you a winner all the time. Therefore, before entering the day trading market, it’s crucial you know how to trade in a safe way.
Find the Best Broker
First of all, every trader needs a safe and reliable broker. Online, there are lots of brokers claiming to be the best options. However, it’s important you choose one suitable for you and your way of trading. With that said, there are a few factors all brokers should fulfil.
- Reasonable pricing – every trade comes with a cost, and you want to keep these as low as possible.
- Educational Resources – for the beginner, easy access to information and tips are helpful.
- Data encryption – for your personal information to be in safe hands.
- Quick and helpful customer support – to easily solve all potential problems occurring.
Start off Small
Day trading can be exciting and thrilling, which might provide some fun as a hobby. However, most traders are in it to earn that extra money. It’s easy to fall into greed, but the many newcomers in trading need to start small.
Beginners should avoid taking too many positions at once. To start off, a maximum of two stocks (or cryptocurrencies or forex, for example) at the time is recommended. Also, the newcomer should only use money he or she can afford to lose, and risk no more than 1% of the capital per trade. When you feel more comfortable, you can scale up bit by bit.
Use Stop-Loss Orders
To avoid suffering big losses, stop-loss orders are useful. A stop-loss order is a way of limiting your losses by automatically selling your asset when it reaches a certain price. The order is set with your broker, and the price level is up to you to decide. If the stop-loss order is set at the right level, you will never have to worry about losing more money than you can afford.