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Many investors, especially the new ones, are attracted to day trading because of the prospect of generating quick money. But that is not the case. Day trading goes beyond online trading and making a fortune out of it. A successful day trading lies on one’s trading style.

The following are some important rules every new trader should follow.

Gain Knowledge

Knowledge is power. This cliché is applicable in every aspect of life, even in day trading. Rookie investors, learn the basics of day trading, including basic trading procedures and tools, details about stocks you plan to trade. Know the latest in stock markets and monitor events affecting stocks and markets. Day trading can become harder and more risky if you have no knowledge. Also, do your research. List down your desired stocks. Keep abreast of these firms and their respective markets. Read newspapers. And visit financial websites regularly. An informed decision is equivalent to a better decision.

Set Realistic Goals

Day trading has no room for ideal and ambitious investors. When you trade, do not lose out on decent profits in exchange for more earnings. Markets are tricky in nature. So, opt for a smaller gains or end up losing substantially. It is normal to sustain losses, but do not repent losing out on a chance. You can always repurchase the same stock when it declines.

Use Margin Trading Properly

Trading on margin refers to the act of borrowing money from a brokerage firm for trading. Margin trading can be a friend or an enemy. It can either amplify profits or losses. Learn to control trading indulgence. How? Trade with cash or hand. Or start day trading without employing margin.

Plot Entry and Exit Points

If a new trader knows the price at which he desires to enter and exit, he can book profits and avoid unnecessary confusion. You must have placed pre-fixed levels in your mind for each stock you want to trade, so that when markets become not favorable, you can exit right away.

Focus on One or Two Stocks

In day trading, it is advisable concentrate on one or two stocks. That way, you can track and find trading opportunities easier. When investors trade several stocks, they tend to miss out a chance to exit at a right time.

Do Not Trade on Rush Hours

Several investors begin placing their orders and traders start to execute those the moment the markets open in the morning, contributing to price volatility. Veteran traders can distinguish patterns and pick appropriately at the back of their minds. But for beginners, analyze the market and make no move for the first 15-20 minutes. Middle hours are normally less volatile, while movements resume toward the closing bell.

Trade the Money You Can Afford to Lose

This is the money you are prepared to lose, not your monthly budget, emergency cushion, or vacation fund. Day trading is complicated and has a high chance of losing. Therefore, allocate a particular amount which you can trade with and afford to lose. Day trading is useless if your daily needs are neglected.

Make Time for Day Trading

No, day trading does not implore you to leave everything behind, including your day job. But one has to set aside ample time for this. It encompasses trailing markets and spotting opportunities that emerge during trading hours.

Avoid Penny Stocks

Shy away from penny stocks, newbies. Leave that to seasoned investors. Such stocks are highly illiquid and the chances reaping a huge profit on these stocks are very little.

Limit Orders

A market order is facilitated at the best price available at the time it is executed. Although it has no price guarantee, limiting orders can assure the price and can help you trade more precisely in which you can set the buying and selling price.

Ignore Unreliable Sources

Most of the time, any advertisement, mail, email, or text message that claims a too good to be true profit is bogus. Remember, success in day trading is not achieved overnight. Just to be sure, do a research about the company.

Never Let Emotion Dictate Your Trades

Day trading test the waters, including your emotions. Given its complexity, one has to learn to keep greed and fear at bay. Any trading decision should be done logically, not emotionally. Novice traders find it difficult to separate their emotions from their trades. One of the best things to do before entering the real arena is to do a simulation exercise.

Day trading is complicated, and it has never been easy to achieve success in this pursuit. But if equipped with proper knowledge, discipline, and right set of skills, this can be possible. Take heed from legendary trader Jesse Livermore: self-learning is the best way to learn and prosper.