50 One-Sentence Tips To Help You Be a Better Trader

So you want to be a day trader? It’s not a job for the faint of heart, but by following some simple advice and strategies, day trading can help you see good returns in no time.

The Basics of Day Trading

Explore different entry strategies to find which one will work for you.
Keep an eye on stocks that have liquidity and volatility.
Liquidity allows you to enter and exit stocks at prices you want.
Volatility shows you how much the stock is expected to move over the course of the day.
These combined indicators highlight stocks that are easy to buy and sell, possessing high expected margins.
Embrace new data in all forms.
Candlestick patterns show a stock’s history and can calculate on what day it’s expected to break even.
The day where a stock breaks even on a candlestick pattern (and theoretically begins it’s climb into profitability) is called a “doji point”.
There are several things to consider in a doji point to double-check it’s validity.
Check for a volume spike to see if other traders are still buying at that price; a low volume suggests that the price may not hold up to buyers.
Check the previous high and low prices from previous days, as an extreme outlier is cause for doubt.
Half the battle is knowing when to buy, but knowing to sell is when money is made and lost.
One strategy is scalping, which is to sell as soon as a profit is made.
Some strategies, including scalping, provide small margins, but can be done frequently.
Fading means to sell after a big gain.
Fading works on the assumption that the stock has already attracted all new buyers and will shortly fall after you sell.
Daily Pivots is a strategy where buyers attempt to buy at the lowest point of the day and sell at the highest.
The Momentum strategy consists of buying and selling based on volume of stock sold or trading by news releases.
Momentum strategy works by selling when sales volume goes down and graphs show bearish patterns.
This isn’t a job for the faint of heart, and you will lose money, but setting a stop-loss limit will shore up down days.
There are two ways to do set stops: stop-loss when the price dips too low, and when one of your entry strategies (whichever one you choose to place most emphasis on) is broken.
No matter what happens, set a limit and stick to it; don’t make up for losses.
Inexperienced day traders will try to recoup losses by making riskier moves with more money in hopes of a larger payoff, only to lose more money than they did before.
When you hit your loss limit, close the computer and go outside. You’re done for the day.

What you Won’t Find in Books

If you find a system that works, stick to it.
Don’t get greedy.
Don’t gamble what you’re not willing to lose.
Worry about what you can fix, but remember that you’re at the mercy of the markets.
Study what your personal day trading heroes have done in the past to make their big gains and how they bought and sold shares.
Day traders need to be information sponges, and seeing how other influential traders made their names can give you new ideas for what to look for in a stock.
Seek consistent gains instead of trying to win the lottery.
Long term investors have a ROI goal of 50%; day traders work on smaller margins, usually targeting a 20% ROI for each trade.
Buy low and sell high is Day Trader 101, but hesitance can cost you money; buy when the stock is low.
If you don’t like the looks of the market, there is no shame in not trading; pay attention and learn what’s happening.
The slow, low-volume trade period is generally around 11:30 am and 2 pm EST.
Rule of thumb: never let your position turn against you more than 2% overall. If this happens, it’s a good time to get rid of the stock.
Leave your emotions at the door. Day trading is a game of numbers, and irrational decisions will only cost you money.
Have a steadfast rule of when to sell, no matter what.
Withdraw your earnings into a money market account.
Take responsibility for your losses the same way you claim your earnings. You made the decision, for better or worse.
When you lose money (and you will), learn from those mistakes.
Whether you didn’t sell for some intangible reason or you ignored your own stop-losses, there’s almost always a lesson to be learned in loss.
Even the best traders will occasionally be on the losing end of an act of god; a fire at a manufacturing plant or unexpected bad news can cause a dip in stock prices, and the only thing to do is cut your losses.
Amateurs make trades based on how much money can be made.
Professionals make trades based on how much money can be lost.
Professionals seek to limit potential losses while amateurs seek to maximize wins.
This difference in philosophy is what allows pros to take money from the amateurs on a consistent basis.
Don’t only keep your eyes out for opportunities to trade; look for opportunities not to trade.
If you decide to stop, reentry is only a commission away.