Day traders are stock market participants who are focused on buying and selling shares on the same day to book profits. They need to ride the market momentum and keep an eye more on the stock movements than on valuations. Day traders capitalize on the price movements on a particular trading day and square off their position before the end of the day.

As a day trader, you could lose your money if you blindly follow online stock trading advice. What you need is a good strategy for trading that will help you profit consistently. Also, you must know how to manage your risk.

So, here are some effective tips from us at TradeZero that will help you formulate a successful day trading strategy. As an online trading firm, we provide a full suite of online trading platforms, and commission-free stock trading. You can utilize the following tips to develop a trading strategy that a best online stock trading company will endorse.

  • Have a plan and be prepared: One of the most important and basic tips for all traders – whether a beginner or an expert – is to be prepared, have a concrete plan of action and make sure you know what you’re buying and selling, how much you’re going to trade, and when you’re going to trade it. If you are not well-prepared for this and don’t have a plan, then you might make mistakes and lose money. With the host of information and learning resources available, in the form of books, educational courses, trading conferences and, of course, the Internet, develop a good trading plan. 

  • Start Small: If you are a beginner in trading, begin with smaller amounts of money that you can afford to lose. This is because many intraday traders lose money when they first start trading and moreover, it can also be stressful. This could lead you to take bad decisions if you find that the money you can't afford to lose is disappearing. So, always start small, limit your losses and most importantly, trade wisely in response to losses – if they happen. 

  • Make use of the latest technologies: If you want to stay ahead of others, then make use of the resources available to you, because there are thousands of other traders out there. TradeZero offers four different state-of-the-art, zero commission trading softwares such as:

    • ZeroPro – A software designed for the active day trader
    • ZeroWeb – Designed for the active online trader
    • ZeroFree - Software that provides a zero cost software solution for all traders
    • ZeroMobile – Software for real-time trading on the go

These software solutions from TradeZero deliver all the tools that you need to make fast, informed and accurate decisions at the click of a button to become a successful trader.

  • Avoid investing in a single stock: Experts recommend not to invest all your trading money in a single stock; instead, you can diversify your intraday positions across a handful of stocks. This method will help you balance your day trading strategy and minimize risk. Always look for stocks with high liquidity that trade at huge volumes as it would allow you to more easily buy or sell larger quantities. 

  • Choose limit orders to cut losses: While entering and exiting trades, decide what type of order – such as market order or limit order - you’ll place. For instance, if a market order is placed, you must know that it's executed at the best price available at the time, therefore there’s no price guarantee. On the other hand, with a limit order, the price is guaranteed and it helps you trade with more precision, but it does not guarantee execution. A trader can set the price (not unrealistic but executable) for buying as well as selling.

  • Book profit when your target price is reached: Successful day trading relies on the high leverage and margins that traders get to enjoy. These factors help augment profits (and losses). The best strategy is not to wait for the stock price to increase more once it has reached your target price. Your trading decisions must be based on actual market facts and strategies and not just on your feeling regarding the performance of a stock. 

  • Manage risk with a comprehensive risk management strategy: Have an inclusive risk management strategy upfront as it will ensure you only lose what you can afford. Without a risk strategy in place, your career as a day trader could be short-lived. Include strategies such as identifying stop-loss levels per trade, trading with a reputable broker and most importantly having an overall strategy so that individual trades do not put your entire portfolio at risk.

  • Know when to stop: If you understand that your trading strategy isn’t working, don’t move forward and keep investing money at it. Instead stop your trading, else it might lead to more losses. 

Most importantly, have a trading plan, control risk, and focus on creating strategies that will keep you in the profit or steady even if you only win three or four trades out of 10. To achieve success as a trader, put yourself in a position to research long- and short-term strategies and find the strategy that fits your goals, finances, and situation. Follow the above tips, have the basic knowledge required to trade and become a successful intraday trader. 

With commission free trading and many other features, TradeZero can help  with your trading process. Our platform can give you a clear picture of stocks and markets so you can enjoy greater resources at your fingertips.

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