Disclaimer: this is a contributed post. I took the time to review the post before publication to ensure it met the standards of the blog.
Tips to Become a Successful Day Trader
Compared to the 1980s when people needed to run back and forth on the trading floor, today's traders have it easy thanks to various advancements in technology.
There’s no need to run and shout while trading Forex anymore, as it only takes a few clicks on a computer to make a transaction or sale. But while the act of trading money was made easier by technology, the analysis that comes with trading Forex can be quite tricky to understand. Because of the complexities of technical analysis, day trading is described by traders and investors alike as ‘the most difficult way to make an easy living’.
A day trader deals in the buying and selling of many investments like Forex, stocks, and mutual funds. At the end of the trading day, a day trader cashes in with no open positions, thus the term “day trader”. If a person holds a position for the next day trading, it's called swing trading.
Unlike fundamental analysis, which requires keeping yourself in the loop with the most important news items, technical analysis requires having knowledge on price movements and graphs. A trader looks for a convergence of support, as well as levels of resistance using several methods such as multiple time frame analysis. This type of method analyzes the pricing of a stock or commodity using charts that record different time frames. For more information on this, you can take a look at Fundamental vs. Technical Analysis and Why I Use Technical Analysis to learn more about different charts and trading techniques.
Getting information on price movements
Traders used to read papers and have dinners with the CEOs of major corporations to learn about well-performing stocks. The internet is now the best tool for day trading. If you want to trade efficiently, you will need the help of multiple screens on your computer. It is next to impossible to trade quickly without multiple screens because news and data feeds appear at the same time on different channels. Take a look at how quickly the prices change in the FOREX market. The changes are faster than people can blink so if you want to stay on top of your trade, you need to invest in multiple monitors. If you need help in setting up dual monitors, here's a quick guide by PC World to give you an idea of what you need to setup.
The New York Stock Exchange and Forex are the most popular markets that traders go to given their quantity of tradable assets. Forex trades over $3.5 trillion per day, and this is because currency conversion is a huge player in the financial markets of the world, according to Teramusu. The New York Stock Exchange, on the other hand, comes in second, trading about $70 billion every day.
You need to be awake at these hours if you want to trade in either the FOREX or New York Stock Exchange markets. All of the hours are in EST.
Forex: Sunday at 5 PM to Friday 4:55 PM
New York Stock Exchange: Weekdays 9:30 AM to 4 PM
It’s important to keep in mind that there’s a chance that you will lose money while trading. But with enough research and practice, traders can cut their losses over a long time. Good day traders sacrifice small losses but take back huge gains, and this can be achieved with good decision-making based on technical and fundamental analysis.