Making money consistently while day trading is one of the hardest goals to achieve, even for those that are successful traders. Day trading success depends highly on several factors coming together and aligning just perfectly. New investors are often motivated to try day trading because they think it's an easy way to earn money consistently. Some people even quit their jobs and start day trading full time with no prior knowledge of the market. That's one of the quickest ways to lose your money. Day trading can provide significant income, as long as you understand the challenges and risks associated with it.
Where to Start?
If you have ever wondered what day trading is, it is the practice of buying price movements of a single stock within a single trading session. An example of day trading is buying AMZN stock for $154 in the morning and selling it for $175 after earnings in the afternoon. Because the buy and sell occurred on the same day, within the same trading period, it is considered day trading. Day traders do not care whether the price of a stock is trending upwards or downwards. They only care by how much the stock is trending which direction and whether or not it is profitable to buy and sell later. Day traders improve their odds of making successful trades by researching price movements daily. They watch charts and use technical analysis to establish a strategy that has a win and loss ratio.
Why Is a Strategy Important?
Because day trading requires an entirely different mindset than traditional buy and hold trading, it can be difficult to adjust.
Because day trading takes place over such a small amount of time, it's important to have a strategy going in. An entrance price, exit price, and stop-loss are all things that should be part of a good day trader's strategy kit. Some of the best traders on StockTwits will make calls that can help you learn the ropes of day trading if you're new. You should always do your own research so you can understand the position you're taking. Otherwise, you are gambling with your money rather than trying to earn an investment.
Practice Makes Perfect
Because day trading requires an entirely different mindset than traditional buy and hold trading, it can be difficult to adjust. Practicing trades on a dummy account with fake money can be an excellent way to learn the ropes without hurting yourself financially. Practice day trading while maintaining your day job. It's unlikely that you'll produce any substantial income within the first few months of learning the craft. It can take upwards of six months to a year before day traders start earning money consistently on their trades. That consistent money can vanish overnight if your day trading strategy becomes untenable.
Good day traders are always testing new strategies to deploy the moment the market shifts. Keep this in mind when developing strategies. If something seems positive in a bear market, set it aside for testing when market conditions align. Overall, trading consistently as a day trader depends highly on your own expertise and the market sentiment.