Day trading is a way of making money multiple times a day. Trading strategically can rake in immense profits. However, without an effective strategy, beginners may lose a lot of money. You may ask, what is the best day trading strategy for beginners?

Kindly continue reading to find out 

What Is Day Trading?

Day trading is simply buying and selling stocks within a day. Day trading aims to make small profits within a time frame—eventually, the small profits compound.

Is Day Trading Legal?

Day trading is legal, and it is commonly applied in foreign exchange and stock markets.

How Does Day Trading Work?

Day trading depends on market volatility. Traders earn profits by studying market fluctuations. Generally, day traders buy a stock when it moves higher or short sell if it is moving lower. 

Short selling is like betting against the stock; therefore, profiting from the stock's fall. Furthermore, day traders can trade a stock multiple times while taking advantage of the changing sentiment.

How Profitable Is Day Trading?

Although you can make money while day trading, it is not a good idea. Profit is dependent on how the market performs. Therefore, it isn't easy to make a consistent profit. However, you can accurately time the market and predict a stock's movement to rake in immense profits.

How Can A Beginner Become Successful At Day Trading?

Becoming successful at day trading involves using strategies that work. Top strategies for becoming a successful day trader include;

1. Staying informed

Apart from knowing trading procedures, you have to keep up with the latest news and events that affect the stock market. Once you have a list of stocks you want to trade, ensure you are always informed about the companies and the general market.

2. Setting funds aside

Before starting your trade, it is best practice to set aside capital you're willing to risk per trade. Usually, a successful day trader risks less than 1% of their accounts. For instance, if you're ready to risk 0.5% of your capital on each trade, your maximum loss will be your risk multiplied by your capital. 

Furthermore, it is advisable always to set aside funds you can afford to lose. Nevertheless, you won't lose every time.

3. Setting time aside

Day trading requires your time. The key to making profits with day trading is moving quickly. Opportunities can arise at any time during trading hours. Therefore, don't consider day trading if you don't have time to spare.

4. Starting small

Beginners should focus on a maximum of one or two stocks per trading session. With few stocks, you can easily track and find opportunities. Recently, it has been much easier to trade fractional shares in smaller dollar amounts.

5. Limiting orders

Limiting orders can help you cut losses. Market orders execute your trades at the best price available; However, there is no price guarantee. Limiting orders, on the other hand, guarantees a price but not its execution. In addition, limiting orders help you trade with precision because you can set your price. It is important to note that when setting prices, they should be realistic enough for executable transactions.

6. Staying cool

As a day trader, the stock market will test your patience and get on your nerves. It is advisable to be hopeful while keeping greed and fear at bay. In addition, your trading decisions should always be logical rather than emotional. 

Conclusion

Day trading depends on market volatility to make money within a time frame – usually a day. Nevertheless, you can lose as much money as you can make. Having an effective strategy can cut your losses as a day trader. Ensure that you always stay informed, set money and time apart, and limit your orders to succeed at day trading.