5 tips for success in day trading
1- Stay informed
The global market is always changing, with stocks, commodities and indices constantly rising and falling.
“In fact, there are so many assets in motion that it is impossible for a single person to know all the different factors that influence the movement of the market. If that were the case, we would all be rich”, explains Santos.
However, there are ways to better understand which stocks or currencies may rise or fall.
One of the main ways to understand the market is to follow the news.
Reading leading financial publications, agencies, forex and day-trading blogs and subscribing to newsletters are great ways to ensure you are up to date on relevant topics, trends, announcements and updates.
The more information you have over time – the better your understanding and ability to predict changes in global markets.
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2-Define your style
Before knowing the market, you have to know yourself.
Understand your limits, your possibilities and how much risk you can take throughout the day.
“It is also necessary to understand what is the best moment to operate. The market presents different opportunities and they can generate good returns. So, an attentive and consistent trader, with a defined style, knows exactly when to go to the field”, explains Santos.
3-Manage risks
There is always a risk when it comes to investing in the stock market.
No investment is foolproof and precautions should always be taken to minimize risk.
A good way to reduce the risk of losing too much of your funds is to set a stop loss point.
A stop-loss is an order that automatically stops an action you’ve decided on (buy or sell a stock, for example) if your losses reach a certain level.
That way, with each trade, you can decide in advance what the maximum amount you are willing to risk and know that your losses will not be greater than that.
4- Diversify your portfolio
This point also has to do with risk management, but it is important enough to receive special attention.
Regardless of whether you only trade one type of instrument (currencies, commodities, stocks or indices), you should never put all your eggs in one basket.
Diversity is key, and as there are so many investment options, it can be smart to spread your funds across different transactions.
“Remember: even the best traders only win about 60% of the time, but with a diversified portfolio and stop-loss orders, you can have more chances of making a profit,” stresses Santos.
5-Copy successful investors
You have the option of linking your funds to an experienced investor’s portfolio.
Basically, you choose an investor whose investment style you like, and has a track record of success, and allocate a certain amount of funds to follow suit.
That way you don’t have to constantly check the status of your transactions and you can put your money in the hands of investors who have shown profit in the past.
Of course, there are no guarantees in trading, and even the most successful traders have losing streaks – so even when you copy an incredibly successful trader, you should have a stop-loss in place and spread your portfolio.
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