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Stock trading is like any business in that it starts with the basics and progresses through several stages. Our seven easy steps to stock trading profits start with getting set up, learning how to do technical analysis and developing a strategy. Successful day trading comes from a sound fundamental knowledge of stocks traded and diligence in applying the principles of technical analysis in a timely fashion.
Get Set Up
Before you learn how to become a day trader, you will need a trade station, strong and reliable internet connection, and computer trading software compatible with what your broker uses. That means that you should pick a broker and use compatible software for online stock trading.
Learn the Basics
Technical analysis of stocks allows day traders to anticipate stock price movements. Markets repeat themselves and there are distinct patterns that tend to predict future stock price changes. Essentially the day trader reads the first half of the pattern to anticipate the second half. Doing technical analysis and trading based on its predictions requires knowledge of technical patterns and is also part performance art. Stage fright is not so much of an issue in day trading but the twin demons of fear and greed are.
Pick a Coach
The old saying is that experience is the best teacher. However, if that experience comes at the expense of losing your trading capital, there is a better way. Hire a stock trading coach and follow his or her trading cues. Learn from the experience of others. You can practice simulation trading all day long to get the rhythm of trading. But, when you put your own money on the line in a trade it is a different matter. Learn from a pro and your trading experience will likely become profitable much sooner than if
you simply go it alone.
Devise a Strategy
There are lots of potentially profitable day trading strategies. You can engage in scalping, trend trading, or range trading. Many take a contrarian approach to day trading and wait for market reversals. All approaches can be profitable. This is part of our seven easy steps to stock trading profits because it is essential to devise a single strategy and follow it throughout the trading day. Day trading stocks is a business and a sound business operates according to a plan. Show up for work. Devise your plan. Follow your plan.
Keep Track of Results
There are two types of audios in our seven easy steps to stock trading profits. One is a results audit and the other is a process audit. Keep track of your trading results. Where did you make money and where did you lose? How many trades did you make and what was your cost in fees and commissions? When you have spotted the high and low points in your results audit do a process audio. This means that you will look at you plan, if you were following it or not, and how well it worked.