A Brief Guide for Novice Day Traders

So, you have decided to become a day trader, which is great news. However, there are certain guidelines that you will have to follow to become good at your day trading job.

Here are a few rules to follow:

Practice & Take Time to Understand the Market

As a novice day trader, the first thing to do is to get a paper trading account, which means that you will be practicing with fake simulated money in your brokerage account. Since you will be new in day trading, naturally, you will have no idea about technical analysis, reading SEC filings, analyzing news, etc.

So, instead of risking your hard-earned money and diving right into trading, you are recommended to take a step back and start practicing paper trading. For instance, you might want to practice on the trading platform of thinkorswim – this platform includes an amazing feature that allows you to go back in time and practice the price action on almost any stock.

Another ideal platform for practicing your day trading skills is Interactive Brokers – this platform is available for people living in the USA and Canada. Nonetheless, you must purchase their data subscriptions to receive live market data.

Learn Through Free Online Resources

Before you venture into the world of day trading, you might want to start learning through free online resources. There are countless resources out there, such as on YouTube. You can find numerous guides on day trading strategies, different ways to find stocks to trade, and different reviews on trades.

The underlying reason to start with paper money and free online resources is to prepare yourself financially and mentally for the following years of hard work that are to come once you get fully immersed in day trading.

Most novice day traders who jump into the day trading market have no idea about what is required to make it in the day trading niche. More than 90% of people buy into a false opinion that trading is easy and more something like a side business, which is not true.

You ought to know that trading is not easy, so it requires determination and hard work to get somewhere. Daily, controlling risk and maintaining discipline and focus seems to be a constant battle.

Even if you are starting out trading part-time with a full-time job, you are still running a part-time business that requires full-time effort.

Keep Track of Your Trades

One of the best ways to keep track of your trades is by keeping a journal. This means that you will be spending ten minutes each day after the market is closed to write down your entries, exits, and setups from your day trades.

Only through efficient tracking of your trades can you start seeing what you are good at and who you are as a trader. For instance, you will be able to accurately assess whether you are good at trading large caps or small-cap penny stocks.

You will also know whether you trade better by using indicators for entries or whether you are better at trend following and only purchasing after a reversal trend has formed.

These are a few examples of the important questions you need to find out from your journal records.

Remember that you might see people on social media doing different things, but what works for other people isn’t necessarily working for you. This perfectly explains why tracking your trade and journaling everything will help you see the bigger picture as you will be able to figure out what you are good at and where to put your focus.

Once you have found one or two setups that you are very good at, shift your focus on those setups and ignore everything else. If this sounds good to you, and you are ready to dig further into the word of day trading, you might also want to know more about the following: Is Day Trading Halal or Haram in Islam.

Be Consistent

It doesn’t matter whether you are a novice day trader or a top professional – your ultimate goal is to become the best at day trading. Simply – it is all about consistency and profitability. Profitability means that you are coming out profitable every single week.

While staying consistent, you must also master the perfect balance between ambition and fear. Initial success can lead to impulsive decisions, including not thinking through and taking rapid actions. In contrast, fear can hold the day trader back despite having an opportunity in the making.