His trades normally have a short lifespan, with almost all of his positions closed out by the end of the trading day. To get started on online day trading, these are the things that you should know.
Choosing An Online Broker.
Brokerage commission is not the only criterion in choosing an online broker. Make sure you choose one with a robust trading platform that can execute your trades promptly. http://Etrade.com and Scottrade are the premium brokers that offer superfast trade turnaround, and they have very attractive commission rates for hyperactive traders. But if you have to choose a low-cost broker, http://FirstTrade.com and http://AFTrader.com are the few low-cost brokers that offer decent trade turnaround.
Before starting any trade, it is essential to put in place a trading plan, and follow this plan religiously. A trading plan sets out different criteria and parameters which dictate how trading decisions should me made in all market conditions. With a trading plan, you will know whether to stop the loss and close out the trade, or to ride out this volatile period.
Make it your habit to be disciplined. In day trading, the price of a volatile stock can fluctuate very fast. There will be times when the price will move against you. Cut loss when you’re supposed to in accordance with your trading plan. By the same token, take profit when your trading plan dictates so! And don’t trade for the sake of trading. If there’s no good trading opportunity, stay out of the market.
Keep Your Emotions In Check
Never allow your emotions to rule your trading. Be disciplined, stick to your trading plan, and you will not get emotional during a trade. Trading decisions are often ruled by emotions for a trader who lacks discipline. This leads to bad decisions resulting in trading losses. Fear or greed are two emotions that are detrimental to a day trader.
To summarize, always develop a trading plan or system, and constantly tweak the plan for optimal results until it works. Be disciplined and know when to cut loss and take profit. And last but not least, get emotions out of the way when you are trading.
I hope you have benefited from this beginner guide to online day trading article. Happy trading!