Investing and trading strategies X3 E-Book

George Graham

• Herausgeber: Youcanprint
• Kategorie: Fachliteratur
• Sprache: Englisch
• Veröffentlichungsjahr: 2023

Beschreibung

Are you searching for your ticket to financial independence? Master the art of day trading by applying these often-overlooked strategies! Putting your hands on this guide, you will understand how day trading works, effectively manage your money, and are closer to financial independence. Ready? Order your copy!

Leseprobe

Table of Contents

Day Trading Strategies the Beginner’s Guide

Introduction

CHAPTER 1: The Basic Concepts of Day Trading

What Is Day Trading?

How Day Trading Works?

Overview of Day Trading

Day Trading vs. Long Term Investing

Benefits of Day Trading

Downsides of Day Trading

Do’s of Day Trading

Don'ts of Day Trading

CHAPTER 2: Trading Plan

Why Do You Need a Trading Plan?

How to Build A Trade Plan?

Personalizing Your Day Trading Plans

CHAPTER 3: Step-By-Step Guide to a Successful Trade

Selecting a Broker

Building Up Your Watch List

Margin

Execution

Trading Plan (entry, exit, and stop-loss)

CHAPTER 4: The Right Mindset for Managing Money

The Mindset of a Successful Trader

Have the Right Mindset

The Importance of a Positive Mindset

Ways to Acquire a Trader Mindset

CHAPTER 5: Mistakes Beginners Make

Going After Patterns

Absence of Proper Tools

Entering Too Big

Balancing Down

Not Cutting Losses

Revenge Trading

Going in Unprepared

Lack of Proper Tools

Averaging Down

Vengeance Trading

Choosing the Wrong Broker

Not Having Up to Date Technology

Getting in at the Wrong Time

Not Balancing Research with the Current Truth

Not Treating Day Trading as a Job

Chasing Trades

Quick Trading After News Announcement

Trading More than 2% of Your Capital in a Single Trade

Relying Too Much on Day Trading Insights Found Online

Poor Speculation

Improper Education and Research

Not Having Clear Investment Goals

Letting Emotions Rather Than Facts Govern Decisions

Lack of Planning

Adding more Capital to a Trade that is Going Down

Not Setting Stop-loss Parameters

Taking Several Related Trades

Investing What You are not Ready to Lose

Entering the Trade Blindly

Not Carrying out an Analysis of the Market

CHAPTER 6: Day Trading Strategies

Proper Market Timing

Stop Loss

Profit-making by Short Selling

Scalping

Breakout

Momentum

The ABCD Pattern

Flag Momentum

Reversal Trading

Moving Average Trend Trading

VWAP Trading

Choosing Trading Instruments

Time Over Sales

Chart Patterns

Use of Technical Indicators

Using Limit Orders

Setup Trades Every End of The Day

Use the TLS Principle

Utilizing Pivot Points

Position Sizing

Fading

Trading the News

After Hours Trading

High-frequency Trading (HFT)

CHAPTER 7: Trading Order Types

Types of Orders

Market Order

Limit Order

Stop Order

Buy-Stop

Mechanism of Trading Orders

CHAPTER 8: How to Generate Passive Income

How to Generate Passive Income Automation

CHAPTER 9: Trading Psychology

The Important Psychology of Trading

Psychological Issues

How to Achieve Emotional Stability

Emotional Intelligence

Discipline for Day Traders

Discipline Guidelines

Emotional Intelligence

CHAPTER 10: Tips for Success

Understand Your Motive

Never Stop Learning

Realize Your Goal

Set an Entry and Exit Price

Do not Rush to Trade when the Market Opens

Take Advantage of Technology

Be Focused

Trade with Money you can Afford to Lose

Manage your Risks

Avoid using Margins

Bear the Business Kind of Mindset

Developing and Implementing a Trading Methodology

Identify Your Flaws as Well as Your Strengths

Allow Yourself Time

Consistent Research

Keeping a Trade Journal

Validating Your Plans

Adhere to Suggestions, Pay the Price

Refusing to Cut Losses Can Be Costly

Discipline is Everything

Beginning Traders Seek Magic; Experts Know Best

Uninformed Traders Lack Knowledge

Learning From Others

Regularly Cashing Out

Taking Breaks and Having Fun

Have a Network of Fellow Traders?

Love the Trading Market

Disregard the Holy Grail

Connect with Your Trading Plan

Arrange Your Personal Life

Try Not to Break Your Rules

Tune in to Your Intuition

Make Peace with Losses

Try not to Believe in a Company

Lose the Crowd

Watch for Early Warnings

Pursue Your Discipline

Stay Away from Market Gurus

Practice Accounts

Stick to What You Know

Keep Practicing

Don’t Be Too Excited

Pick the Right Stocks

Stick With Your Strategy

Keep Emotions Out

Come Up with the Right Stop Points

Consider Working with a Broker

Take a Break When Needed

Write Down Tips After Your Trades

Create a Routine

Have the Proper Tools for the Trade

Have a Strategy

Conclusion

Option Trading for Beginners

Introduction

CHAPTER 1: What is Options Trading?

What Are Options?

The Options Trading Concept

Basic Option Trading Terminologies

Types of Option Trades

Learn How to Read Options Symbols

Brokerage Levels

Reasons That Options Are Great for Investing

Components of an Option Contract

Premium

Adjustments to Option Contracts

Contract Elements

Understanding the Call Option

Understanding the Put Option

CHAPTER 2: Bond Market and Stock Market

How the Bond Market Works

The Stock Market

The Most Typical Forms of Stocks

CHAPTER 3: Forms of Trading

Covered Call

Married Put

Bull Put Spread

Iron Condor

Iron Butterfly

Naked Calls

Credit Spreads

Straddles and Strangles

The Bear Call Spread

The Bear Put Spread

Bull Call Spread

Protective Collar

CHAPTER 4: Option Volatility and Pricing

Understanding Options Pricing

Factors Influencing Prices of Options

Volatility

CHAPTER 5: Valuation

Understanding Intrinsic Value

Understanding Time Value or Extrinsic Value

CHAPTER 6: Profit and Investing

How to Invest in Options

How Much Should You Invest in Options?

Options Investment Money and Where You Should Find It

A Few Extra Rules to Keep in Mind

Mistakes to be Avoided by New Option Traders

Your Broker

Creating an Options Trading Plan

How to Place an Order

Tips for Success

The Options Trader Mindset

CHAPTER 7: Risk Management

Technical Strategy

Exits

Drawdowns

Other Measurements

Other Forms of Risk

How to be Careful

Easy Ways to Reduce Your Risks

Risks and the Greek Lingo

Find the Greeks

Conclusion

Swing And Day Trading For Beginners

Introduction

CHAPTER 1: Day Trading Basics

What Is Day Trading?

Why is Day Trading the Ideal Way to Make Money?

How the Day Trading Process Works

The Mindset of the Day Trader

Day Trading Plan

How to Decide on What and When to Buy

Deciding When to Sell

Risks Involved in Day Trading

Day Trading Step-By-Step

How to Make Day Trade with Trends?

How Much Money Should You Invest in Day Trading?

Buying Long, Selling Short

Day Trading Investment Options

CHAPTER 2: Swing Trading Basics

What is Swing Trading?

How Does it Work?

How to Make Swing Trade with Trends?

When You Should Choose Swing Trading

Trading Platforms

How Does Swing Trading Differ from Buy and Hold Investing?

Swing Trading in Different Markets

How to Enter a Trade

Swing Trading Strategies for Beginners

The Do’s of Successful Swing Trading

The Don’ts of Successful Swing Trading

The Best Tools for Swing Trading

Tips for Swing Trading for Beginners

CHAPTER 3: Swing Trading or Day Trading: The Difference

Day Trading vs. Swing Trading

CHAPTER 4: The Currency Market

Select Your Currency Pairings

How To Make Your First Trade

Introduction to Fundamental and Technical Analysis

What Is An Interbank Exchange Rate?

Factors affecting Inter-Bank Currency Markets

Supply And Demand in Currency Markets

CHAPTER 5: The Risks of Day Trading

Managing Risk in Day Trading

CHAPTER 6: The Risks of Swing Trading

Managing Risk in Swing Trading

CHAPTER 7: Stocks to Trades

Types of Stocks

Art of Purchasing Right Stocks to Trade

How to Find Stocks for Trades

Choosing the Right Stock to Trade

Entry and Exit Strategies

CHAPTER 8: Investment Strategy

Developing the Right investment Strategy

Creating a Personalized Trading Plan

Conclusion

INVESTING

AND TRADING STRATEGIES X3

DAY TRADING STRATEGIES, THE BEGINNERS GUIDE; OPTIONS TRADING FOR BEGINNERS; SWING AND DAY TRADING - HOW TO GENERATE A PASSIVE INCOME AND DAY TRADE FOR A LIVING

George Graham

This Book Includes

Book 1:

Day Trading Strategies the Beginner’s GuideHow To Develop The Right Money Management Mindset To Generate A Passive Income And Day Trade For A Living

Book 2:

Option Trading for BeginnersA Guide To Investing In The Stock Market And Make Profit With Options. How To Increase Your Income With The Best Strategies And Techniques

Book 3

Swing And Day Trading For BeginnersHow To Make Money With Trading And Investing In The Currency Market By Managing Risk And Using The Best Strategies To Earn A Real Passive Income

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Please note the information contained within this document is for educational and entertainment purposes only. All effort has been executed to present accurate, up to date, and reliable, complete information. No warranties of any kind are declared or implied. Readers acknowledge that the author is not engaging in the rendering of legal, financial, medical or professional advice. The content within this book has been derived from various sources. Please consult a licensed professional before attempting any techniques outlined in this book.

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DAY TRADINGSTRATEGIES THE BEGINNER’S GUIDE

HOW TO DEVELOP THE RIGHT MONEY MANAGEMENT MINDSET TO GENERATE A PASSIVE INCOME AND DAY TRADE FOR A LIVING.

George Graham

Introduction

If you have chosen to buy this book, you may already have been intrigued by the exciting personal and financial rewards that day trading possesses. If you are interested in day trading, you might have heard about the amazing and fascinating tales of some big monetary benefits that day trading has brought for some investors or you might simply want to change your daily routine by switching it from an active job to working from home. 

The following chapters will discuss some of the basics of day trading. Not only will you find all the information you will need to successfully get started as a day trader, but you will also find five success stories.

Day trading isn’t for everybody. It takes a person with the right mindset to become successful. Through this book, you will be able to learn if you are that type of person.

Trading in the financial markets has caught the eye of several people across the globe. This has led to an increase in the need to know how the market works. The most common reason people have joined trading is to create revenue by making profits. 

Day trading involves buying financial instruments and later selling them at a higher price to make profits. People engaging in day trading usually engage in two forms of trade. These forms of the trade include long trade and short trade. 

The process of trading encompasses risk management and trading psychology. There are several ways a trader can avoid or minimize risks through the trade process. He or she is advised to study market psychology and be calm and accurate when making decisions. 

The key to master the art of day trading is maintaining knowledge and discipline. When you are sitting in front of your trading computer screen with your finger on the trigger, you are about to make decisions in split seconds. Your decisions can help you rake in thousands of dollars while at the same time, it can strip you of thousands of dollars. 

CHAPTER 1: The Basic Concepts of Day Trading

What Is Day Trading?

Day trading refers to the transactions that are performed by traders on financial securities within a restricted period of a single trading day. Simply put, it is the buying and selling of different types of securities in a short and limited time frame. It is pertinent to mention here that day trading is not limited to stocks only, and it encompasses futures and currencies as well. The basic point to keep in mind is that day trading spans over a single day. You cannot roll over the open trade positions overnight to the next day. There was a time once when the only people who could actively take part in trade were the ones who belonged to large financial institutions, trading houses, and brokerages. However, things have considerably changed since the advent of the internet. Now there are online trading houses and brokers that have made it possible for an average investor to actively trade.

Day trading is done on different platforms and systems, and the operator must be familiar with the trade. This should not scare you. To find out how it does not work in all cases, you need to be a computer expert and to study the basic movements and technological developments over time. 

Losses in the business market are expected and most traders lose daily transactions. It is also essential to focus and ration for a period of losses and to not forget the fundamental fact that money will sometimes be lost. Focus on the future activities of daily transactions by implementing some of the strategies outlined in the grand scheme. 

Independence is to build your own set of tools. To do this read books, watch every video, interact with a mentor. If the books have another point of confusion in your area then study more. Always grasp the basics after a thorough study. But when you feel lost, do not hesitate to get help. More importantly, the listen to your teacher and analyze the success of movements that are part of his grand plan. 

Good things take time. In a strategic move, think twice, but it should not cause paranoia. Act, by many areas to reduce the number of losses in various activities of daily transactions. 

Also, it takes patience to learn to bea day trader. Day trading will not be accessible at first, but over time, which will be equipped with a lot of skills and experience.

Getting stuck in the past has made many prisoners. Seeing the possible future moves are considered the requirements of a day trader. This implies clear mental thinking about their next possible moves after careful consideration.

A day trader does not need have to be rich initially, but they must have a specific amount of money that has been specially selected to start the trading day. Remember, the first days are always a win or a loss situation as you continue to learn and grow. This particular set of money can be lost as well. Be careful when handling your finances in day trading. Not every story is a good story. 

High interest in something is the objective to be successful. This gives the desire to learn and master what day trading is all about and is the sign of a future entrepreneur. 

Day trading is a lucrative career if you understand its basics and execute it properly. It is a fact that it can be a little challenging for the people who are new to it and are not well-prepared or they don’t have a well-planned strategy to win the game. The key is to understand the fact that even seasoned day traders can certainly hit some rough patches in business and experience painful losses. All days are not successful days.

How Day Trading Works?

The basic thing about day trading is that it is not like an ordinary investing technique. Investing is the technique of buying a bunch of stakes in a particular asset that would build a profit for you over the long term. How long it takes varies from investment to investment, but it may span over years. Investors do in-depth research on a stock and remain greatly concerned about the crests and troughs of the stocks they are investing in. They lookout for the companies which tend to make big profits, which avoid debts, which pay them off on time if they accumulate them, which keep a powerful line of products, and which escape from litigation. 

Day traders work in a compressed window of time. Let’s assume that a day trader buys 500 shares of a stock at 9 am. After half an hour, the price for the stock begins to rise and the day trader sells the stock. If the stock has a rise in price by $0.50 per share, the day trader will bag $250 minus commission. Some day traders use the scalping technique which aims at making small profits by following little price changes throughout the day. Range trading is also popular among day traders as it employs support and resistance techniques to determine decisions about buying and selling. As already mentioned, there is the third technique known as news-based trading. Traders benefit from the volatility that originates due to different pieces of news. Another technique is known as high-frequency trading (HFT) in which a trader uses algorithms to exploit inefficiencies in the markets. 

Day trading is the different form of trading known as swing trading. Swing trading involves selling of financial instruments and latter buying them at a lower price. It is a form of trade that has several people have invested their time and capital in. The potential for making profits is very high. However, it is also accompanied by the high potential of making huge percentages of loss. People who are terms as high-risk takers have the potential to realize good amounts of profits or huge losses. It is because of the nature of the trade. The losses are experienced because of several variables that are always present in trading. The gains and individual experiences are brought to light by margin buying.

There as a big difference between swing trade and day trade. The difference hails from their definitions, it goes a mile ahead to time spent in and risks involved in both forms of trade. Day trade has lower risk involvement, but one has to spend more of his or her time, unlike swing trade. Day traders are prone to participating in two forms of trade which are long trades or short trades. Long trade involves an individual purchasing the financial instruments and selling them after them increasing in value. On the other hand, short trade involves selling financial instruments and later purchasing them after their prices have dropped. 

The trading market has undergone through several advancements. The major change was witnessed during the deregulation process. There was the creation of electronic financial markets during this period. One of the major innovations was the high-frequency trading index. It uses heavy algorithms to enable huge financial firms in stock trading to perform numerous orders in seconds. It is advantageous because it can also predict market trends.

The process of day trading has several challenges. An individual is supposed to be able to make a good decision during two important moments. The first moment is during a good streak and the other is during moments an individual has a poor run. At this point risk management and trading, psychology comes in handy to help an individual in the trade. One is not supposed to panic or make hasty decisions during these moments. An individual needs to have an effective watchlist. A good watchlist built by a trader is supposed to be able to understand the modern trading markets. This is made possible when it features stocks in play, float and market capital, pre-market grippers, real-time intraday scans, and planning trade based on scanners. The success of day trading is also incumbent on effective strategies.

Overview of Day Trading

Before you start trading, look around the market and make your plan on which combination of currencies will you trade. This depends on the volatility of their exchange prices, which is based on previous research done on the past profitable exchanges. Planning also includes the time that you are willing to sit down and monitor the trades, make sure that you stick to the time scheduled to avoid messing up the already earned profit. Remember that choosing the time to trade should be at a time when the market is more active. The market will be there tomorrow and, therefore, when your scheduled time closes your trades. Strategy to be used throughout the time you are trading should also be thought out before you start trading, and it should be adhered to throughout the trading period in the day. 

When day trading, you have to know how to manage your money because at the end of the day you want to have money, not lose money. During the day, you will take part in several trades, and therefore you need to know the amount of money you will use to invest. You have to prepare for losses and gains, but the total loss you expect is of importance to avoid losing all your money at the end of the day. This starts by knowing the risk per trade; this is the amount of money you are ready to lose on one trade. If you are a beginner, it is good to set your risk at a maximum of 2%. The size of the account should also be taken into account. If you have a trade that according to you, has a stop-loss of close to 50 pips, if you risk $200, your risk will be $4. This is done by dividing the amount of money you are risking by the stop loss pips.

Always have a stop target before you start trading, and also consider the type of market you are trading in; some markets are so dynamic such that your stop order might not be executed as per the set value. Therefore, to be safe, set your stops using the actual price-action and the conditions prevailing in the market, it is good to set them around the resistance, and support levels, chart patterns, trend lines, and how volatile the currencies you are using are in the market. It is not only the stop loss position that you should consider during day trading, but also consider the point at which you want to take profits. For maximum profit, place appropriate levels of taking a profit.

Also, you should look at the reward-risk ratio, and when it is 1:1, it means that the amount you are risking equal to what you expect as a profit, and 3:1 has a triple amount to gain to lose. You can mix these such trades such that you have many with a high potential of gaining and few with an equal potential of winning. You can do it the other way around, but make sure that there is a balance that will leave you with some profit.

Although trading takes place at all times in the world, each market region has its hours of trade. Therefore, as a trader, you should know your market, and it's opening and closing hours. You should also know that trading is not good throughout a trading day, and trading is good when the market activity is high. We have four major trading markets, and each of them has it is opening and closing hours. However, some markets open around the same time. For example, Tokyo market open at 7 P.M and close at 4 A.M while the Sydney market opens at 5 P.M until 2 A.M looking at the opening hours of the two markets, there is a time when they are all open, and the, therefore, the level of activity with the currencies increases in the two markets between 5 P.M and 8 P.M when you are in the two markets, it is the best time to trade. This means that when more than one market is open at the same time, the trading activities are heightened, and the price of currencies fluctuates more. Therefore, maximize this by doing trades when the market is very active.

You should also be alert on any news release that can make the price of the currency to fluctuate as you look out for changes in prices. Remember that the news can go against the predicted trend, and if you had already taken a position, you can either lose or gain, and it happens in seconds. You can make money by reacting correctly and within the correct time in day trading. The news to look out for is the GDP data, trade deficits, central bank meetings and announcements, consumer confidence, among other big news affecting the economy in the region.

As you look out for the fluctuations in prices, stay in check not to open so many trades that you cannot control. Having many trades does not mean that you will get a lot of money. The best thing to do is to start your trade-in small portions. Identify three trades that show potential and monitor the trends; it is good to deal with two trades in a day that you will maximize on their profits than dealing with many that you will not make money on.

The amount of money made in the day also depends on the type of trading strategy used. To make more money choose a trading system that will give you more. When using scalping, it can help you to gain more, but you should increase the number of trades because the income obtained from one trade is very small. This is done when your main strategy is scalping. You can do more than one hundred trades in a day so that at the end of the day you have many wins than losses thus at the end of the day you have good money in your wallet.

If you are doing scalping as a supplementary strategy, you should use it when the market is not giving a large range in terms of the fluctuation of prices of currencies. In this case, most of the time, there are no trends in a longer time frame, and therefore using scalping in the short time frame becomes the best option to exploit. This way, you are assured that even without visible trends, there is a possibility that you will not end the day without money. This means that you initiate a long time frame trade, and as it develops, you start new sets of trade with a shorter time frame; it should be done in the same direction. You will then be entering and leaving the trade, as you collect small amounts, then later get a major profit with the long time frame.

In a day, you can also use the false breakouts to make money in day trading. Looking at a trend, you can spot a breakout that you believe that it will not maintain the same direction. This is when you make a move, when the trend comes back to its original line; using this quick realization, you can make some cash. Using a fading breakout is the most effective because breakout tends to come out and out, and eventually, they succeed, but with a fading breakout, you will be sure of making money. The rationale of using breakouts is that the resistance and support levels are known as ceilings and price floors respectively, and when one of them is broken, traders expect the trend to continue in that direction and therefore, the traders react in the opposite direction, which later stabilizes the trend to its original flow. An example is that when the resistance level is broken, most traders think that the price will continue in the upward trend and buy the currency instead of selling. You should, therefore, sell the currency, acting contrary to what everyone is doing, and when the breakout returns to normal, you buy again at a lower price. Similarly, when the support is broken, it means that the movement of the price is downwards, and most traders are likely to sell and not buy. To collect funds from this move, you should buy the currency instead of selling, and when the price resumes to its trend line, you sell it out. This type of trading is much profitable, but it can be very risky, therefore, analyze the graph well to make sure that it is a false breakdown before you enter the trade. However, to be safer, place a limit order when buying and selling, and make sure that at the end of the day, you have money in your wallet.

You can also make money using pivot points, which helps you to determine how prices of currencies are moving. Most of the time, the pivot points will identify prices as bullish or bearish, then represent the averages for the low, high prices and closing prices occurring on a trading day. Do you need to know the market trend? The pivot points will help you with that. Use the pivot points to determine the general direction of the trade; if the market price of the currency is above the base of the pivot point, it suggests that the trade is bullish, and when it is below the pivot base, then it is bearish. Also, when using pivot points, close all the long position trades when the market gets to the resistance levels and close the short ones when the market goes below the support level.

There is also the use of a reversal strategy that is commonly used around the globe; this strategy will help you to make money within a very short time, especially if the currency is moderately volatile. To use this strategy, you will have to study the graph to determine whether it has several consecutive highs and lows. At the highest point, which is called the top, you can easily predict that the price of the currency will reverse, and then react immediately by selling the currency. Similarly, if the graph of the currency has the lowest point, which is known as the bottoms, you predict that the trend will reverse, and buy the currency. When using this strategy, as long as you have predicted the reversal of the trend correctly, you will add money to your wallet.

In day trading, you are required to enter into many trades and exiting, depending on the type of strategy you are using. Therefore, to ensure that you have your funds available for trade when you need it, make sure that you focus on more liquid currencies. Remember that liquidity also comes with volatility. If you tie your money, you will get an opportunity and fail to utilize it because you have no funds at your disposal. Alternatively, always plan your trades such that your wallet does not get depleted because trading that is triggered by a news release is not planned, but when it arises, it is good to take advantage of the opportunity and to make quick money or take a position that will earn you more.

Using the best tools of the trade is also important. These tools are efficient systems. The system you are using in terms of the software should be clear enough to display all the required material or information to make a trade move. The information that you are getting from the software should be sufficient, and in real-time to make timely decisions, you should buy using the correct information that will help you make a profit. The charts drawn should also use real-time data; make sure that you are not reacting after other people have already reacted and made cash; be among the first few to benefit from a change in price that lasted seconds.

Using self-made strategies such as the use of hotkeys to execute important steps can help you add money to your wallet. The most important actions are the exit trade, entry of a trade, and the stop-loss; if these actions are well managed, be sure to have some coins in the wallet. The exit keys make sure that you sell before you start losing what you have already made, and the stop loss keys make you safe from loss of funds. You should also have hotkeys that will enable you to change trading to route within the shortest time possible, which makes you take advantage of the other trading route without losses. Therefore, communicate with your broker to make sure that the two of you share the keys that will make your day trading more profitable.

When you are trading, you should remain calm, even if the market brings some excitement. Trading days are not the same, and this does not mean that you become emotional and excited to make more profits, things can turn down on you. Make sure that a trade move is well planned, and its execution is based on logic and not emotions. Stick to the strategy that you have chosen and avoid listening to all the noise in the market and reacting to them. This leads to making poor decisions and an increase in the losses. Stay focused, calm, and thoughtful, and as you take care of the already opened trade and open new ones and money will be flowing without much effort.

Making money with day trading is a process that involves so many things, as seen, there must be a strategic plan on how you will start the trade, how you will proceed, and how to end. This means that strategies for trading should be put in place and also planned for depending on the currency you are trading with. The system one is using should also be efficient enough to execute a fruitful trade and exit a poor trade within the time that is considered safe. Managing your money through accessing the rewards and risks also plays a part in making sure that you do not regret investing. Trading also should be a logical process and not an emotional one; make sure that you are ambitious enough, but do not go to the end as they might lead to big losses and frustration. When you combine all these, the money will flow in your daily trading.

Day Trading vs. Long Term Investing

Day trading involves trades that usually last for seconds to minutes while long term investing involves trades that remain open for several months and even years. You have to buy and then hold for a lengthy period. There is no room for quick decisions. 

Day trading and long-term investing differ regarding the requirement of the capital involved in the process, the level of skills required, and the commitments needed to perform the job. Day trading and long-term investments are key parts of a well-managed and diversified strategy. Both offer you a passive form of income and great sources for the generation of wealth. 

If you are in the United States of America, you will need $25,000 min to open a brokerage account for day trading. There is no minimum capital requirement to do day trading in the currency market, but the recommended amount is $1,000. If you are aiming at day trading in futures, the best amount to start with is $5,000 to $7,500. A long-term investment is usually aimed at the stock market where the level of unpredictability and liquidity is lower than the currency market. Futures expire after a fixed date therefore they are not ideal for long term investment. 

Investing for the long term involves significant research into the company in which you are injecting your money. Long term investment can be done even if you are doing an active day job. When you have got the desired capital, you should spend a couple of hours each day on the stocks that you have got on your radar for investment. The key part of long-term investment, as opposed to day trading, is the amount of research that you must put in before you buy the stocks. 

Benefits of Day Trading

You can either pair it up with your current job or you can adopt it as a full-time profession. The point is that you can work when and where you want if you opt to be a day trader. You get the freedom to structure your day as you need, and you can work from home or even when you are traveling. 

It is a small business and it doesn’t need a big amount of investment to get started. The initial investment in the equipment that is a computer, a couple of monitors, a fast and reliable internet connection, and trading software. They are relatively inexpensive. 

As an active trader, you have no commitments of any kind to anyone. You work as an independent person hence you answer to no one except yourself. You don’t have a nasty boss who is always glaring from his office to check if you are working or not. When you are ill, you have the liberty to stay in bed for the day. 

The best thing about day trading is that you get to develop your style that is compatible with your nature, your disposition, and is easy-going. When the market appears to be too volatile to handle, you can take the day off and do the pending tasks such as household repair, cooking, or visiting a family member or a friend. You can play with your kids, run errands, or go shopping with the money that you have saved by keeping out of a tricky market. 

The top upside about choosing day trading as a field of earning money is that you don’t need a degree or a specialized level of skills for the purpose. You will have to absorb plenty of knowledge before you could declare yourself fit for active trading, but you don’t have to get some kind of certification in this field. The internet is loaded with several free resources that can help you upgrade your knowledge base in the field of investing. You can enroll in them. The best approach is to pair up the study of online resources with the study of a good book. 

Another best thing about day trading is that you get the chance to be your boss. You work from the comfort of your home, sipping your coffee. You don’t need to seek permission from any higher authority to execute your trades. You are responsible for profits and accountable for however the trade goes on. 

One of the top advantages of being a day trader is that you get to sleep peacefully. All of your trades close when the day ends. There is no risk of an overnight loss. There is no risk that your stock value will drop to zero while you are lost in the valley of dreams. Day trading offers you the security of your profit and greater control over your trading business. If it went well during the day and you bagged sufficient profits, you can go to sleep soundly overnight. 

Even if the market is taking a bad turn, you can take advantage of that. While it struggles, you can short sell and bag profits while it dips to the bottom. If you can make money off bearish conditions in the stock market, you get a competitive advantage over traders. Long term investors have to focus on the fundamentals of a company like its overall health, information about who is in the management board and how they are running the company, the past reports about the company, the record of the profits it posted, its contracts with government and non-government agencies, its tradition of awarding dividends to shareholders and its financial statements. 

Downsides of Day Trading

All that I have discussed above is good news, and you might be very happy to read that. As there are thorns with roses, and deadly lightning with rain, there are some flipsides of day trading as well. My aim to state the downsides of day trading is not to discourage you and cool off your determination but to motivate you to keep a check on whatever you do during business hours. When you know about the downsides, you will be able to save yourself from pitfalls. These are just realities that a day trader must know. 

If the rewards are high, so are tradeoffs. The stock market can be a ruthless arena on occasions. Just like any other knowledge field and a business venture, day trading demands proficiency and a combination of skills because it gets superfast sometimes. You have to do multitasking to keep up with the pace of the market, which puts many traders at a disadvantage in the open market trade.

Day trading demands decision-making in a split-second. It does suit the people who tend to be slow in making decisions. If you aim to be a successful trader, you need to analyze this market quickly. When you are presented with a high-probability trade opportunity, you should act fast with confidence. At the same time, you should be able to manage your trade and maintain discipline so that you can manage your rewards and risk equally well. 

For some of you, day trading can be boring. While the market moves at a lightning speed, you have to make quick decisions, which takes a toll on your emotions. You also have to deal with surging emotions of greed and fear. You must check them before they overcome your brain and guide your actions. The most challenging part while you do all this stuff is sitting before a computer screen for hours. All you have to do is to watch the market and do nothing else. For the majority of the time, the market will move without providing you an opportunity to bag profits. This can be boring sometimes. Therefore, you must train yourself to sit calmly and wait before an opportunity knocks your doors.

Do’s of Day Trading 

Risk Capital 

You have to understand that the stock market is a very volatile place, and anything can happen within a matter of a few seconds. You have to be prepared for anything that it throws at you. To prepare for it, you have to make use of risk capital. Risk capital refers to money that you are willing to risk. You have to convince yourself that even if you lose the money that you have invested then it will not be a big deal for you. For that, you have to make use of your own money and not borrow from anyone, as you will start feeling guilty about investing it. Decide on a set number and invest it. 

Research 

You have to conduct thorough research on the market before investing in it. Don’t think you will learn as you go. That is only possible if you at least know the basics. You have to remain interested in gathering information that is crucial for your investments and it will only come about if you put in some hard work towards it. Nobody is asking you to stay up and go through thick textbooks. All you have to do is go through books and websites and gather enough information to help you get started on the right foot. 

Diversification 

You have to stress diversification in your portfolio. You don’t want all the money to go to the same place. Think of it as a way to increase your stock’s potential. You have to choose different sectors and diverse stocks to invest in. you should also choose one of the different types of investments as they all contribute towards attaining a different result. Diversification is mostly seen, as a tool to cut down on risk and it is best that you not invest any more than 5% in any one of the securities. 

Stop-loss

You have to understand the importance of a stop-loss mechanism. A stop-loss technique is used to safeguard investment. Now say for example you invest $100 and buy shares priced at $5 each. You have to place a stop loss at around $4 to stop it from going down any further. Now you will wonder as to why you have to place the stop loss and undergo one, well, by doing so, you will be saving your money to a large extent. You won’t have to worry about the value slipping further down and can carry on with your trade. 

Take a loss 

It is fine to take a loss from time to time. Don’t think of it as a big hurdle. You will have the chance to convert the loss into a profit. You have to remain confident and invested. You can take a loss on a bad investment that was anyway not going your way. You can also take a loss on an investment that you think is a long hold and will not work for you in the short term. Taking a few losses is the only way in which you can learn to trade well in the market. 

These form the different dos of the stock market that will help you with your intraday trades. 

Don'ts of Day Trading 

No planning 

Do not make the mistake of going about investing in the market without a plan in tow. You have to plan out the different things that you will do in the market and go about it the right way. This plan should include how much you will invest in the market, where you will invest, how you will go about it etc. No planning will translate to getting lost in the stock market, which is not a good sign for any investor. 

Over-rely on a broker 

You must never over-rely on a broker. You have to make your own decisions and know what to do and when. The broker will not know whether an investment is good for you. He will only be bothered about his profits. If he is suggesting something, then you should do your research before investing in the stock. The same extends to emails that you might receive through certain sources. These emails are spams and meant to dupe you. So, don’t make the mistake of trusting everything that you read. 

Message boards 

You have to not care about message boards. These will be available on the Internet and are mostly meant to help people gather information. But there will be pumpers and bashers present there. Pumpers will force people to buy a stock just to increase their value and bashers will force people to sell all their stocks just because they want the value to go down. Both these types are risky, as they will abandon the investors just as soon as their motive is fulfilled. So you have to be quite careful with it. 

Calculate wrong 

Some people make the mistake of calculating wrong. They will not be adept at math and will end up with wrong figures. This is a potential danger to all those looking to increase their wealth potential. If you are not good at calculating, then download an app that will do it for you or carry a calculator around to do the correct calculations. The motive is to make the right calculations and increase your wealth potential. 

Copy strategies 

Do not make the mistake of copying someone else’s strategies. You have to come up with something that is your own and not borrowed from someone else. If you end up borrowing, then you will not be able to attain the desired results. You have to sit with your broker and come up with a custom strategy that you can employ and win big.

CHAPTER 2: Trading Plan

Having a strong trading plan is an important part of successfully trading on the Forex market. Even the experts develop one, so it is important that as a beginner, you do too. In this chapter, you will learn about why you need a roadmap and how you can develop one. 

Developing a trading plan allows you to define a goal and create a system for you to work towards that goal through your trades. Due to the volatility of the market, you cannot create a finite blueprint for your trading plan. However, you can create a general strategy and goals for you to work with. There are certain rules and elements to consider when you are developing your plan to ensure that you have one that is strong and will serve you for the best. 

It is important that anyone who is doing trading on the Forex market, or anywhere else for that matter, to have a strong trading plan. This allows them the opportunity to reap in all of the benefits of having a trading plan from risk management to learning discipline in your trades. Even experts develop plans before entering the Forex market, so it is imperative that as a beginner, you also develop a plan.

Why Do You Need a Trading Plan? 

There are several benefits to having a trading plan when you are getting involved in the Forex market. For one, it is great for you to minimize your risk due to your ability to have a plan for what you will do in certain scenarios. You can also use it to establish your exit strategies beforehand so that you know when you will exit if necessary. Having a plan also allows you to stay focused on your goal and make large strides towards that goal, so you can stay on par for your goals with your trading decisions. Another reason why having a plan is important is because it allows you to ensure that you are constantly evaluating your trades to ensure that your money is working well for you and that you are making strong decisions. If you find that your trades aren’t having high enough yields or are too risky, you can reevaluate your plan and fix your strategy for a better outcome. 

How to Build A Trade Plan? 

If you are interested in ensuring that you do more than simply avoid losing your shirt when you start day trading on the regular, then the first thing you will need to do is to create the type of personalized trading plan that ensures it is more likely to make a profit than not when used in the wild. It isn’t enough just to create the plan; however, you are also going to need to have the dedication and mental determination to stick with it, even when your emotions are in overdrive, which is a skill that can only reliably be counted on with practice. 

Consider your strengths and weaknesses

To ensure that the plan that you end up with is one that you will be able to make use of, the first thing you will need to do is to consider your level of experience with the stock market in the past and how successful you have been at trading earlier. The fast-paced nature of day trading means that it will take more innate knowledge and skill than some of the other investment markets that you could start in. As such, it is important that when it comes to creating a plan that works for you, you also consider various other weaknesses that may hinder you when it comes to day trading and also those skills that will be able to give you an edge over the competition. 

During this personal evaluation, you will want to be certain that you take a look at yourself through an analytical lens as overestimating your abilities will do nothing except set you up for bigger losses, sooner. This analysis isn’t a test, there are no winners or losers, the goal is to get an accurate view of the whole picture as possible, nothing more. Of special import is how likely you believe it to be that you will ignore your plan in the heat of the moment when all of your emotions are running hot. If you can control yourself then great, otherwise you will likely find it helpful to put additional safeguards in place, to save yourself from yourself. 

Creating Your Plan 

Before you create a plan, you need to ask yourself some questions. You should write these questions down in your trading journal to ensure that you are focused on what your goal is and that your plan aligns with the answers you have for the following questions. 

Why do you want to trade with Forex?

What is your opinion on risk?

What is the amount of time you’re willing to invest in trades? 

How much do you know about trading already?

Identifying the answers to these questions is the best way to discover what your goals are with trading and how you position yourself in the market on trades that you will make. You need to answer these questions before you start creating your plan, as they are the basis for the plans that you make. 

Once you answer those four primary questions, there are more you will want to consider. The answer to these will be exactly what you need to know to create your specific plan and move forward with it. Your answers don’t need to be deep and thoughtful, but they do need to be answered clearly. 

Where are you right now, financially? Have you had any involvement in the market yet? If so, what is your involvement?

At this time, what type of trader are you? What are your thoughts on trading and risk?

Based on your level of knowledge right now, how confident do you feel in trading?

What is the amount of capital you have to start your trading with?

What are your financial goals with your trading?

How long do you want to be trading to reach that goal? 

What is the success going to look like? 

Answering these questions gives you a firm guideline of where you want to go and what you want to do with your trading. If you go in saying “I want to make a lot of money” but never define what “a lot” is, you will not able to identify when you get there. You will also not know how to identify if you have been losing too much money. The market is something that you enter for specific purposes, as that is what will assist you in making the money you desire. You don’t necessarily need to have a purpose such as a retirement or education funds, but having a goal of what you want and a timeframe of when you want to achieve it will significantly assist you in mastering it and making as much as you desire. 

Take into account other challenges you might face

When it comes to building your plan, you will want to be sure to keep in mind any external challenges you might have to deal with in addition to the internal ones. Challenges in this vein are typically things like lacking the ideal resources for a perfect start or personal issues that make planning for the future more difficult than it otherwise might be. The point is that you will want to be well aware of what you are fighting against in addition to the traditional inconsistencies in the market. Failing to take these types of challenges into account upfront is always going to lead to a decreased overall success rate. 

General Planning Rules 

There are a few plans when you are preparing to trade on the market. There are no blueprints, though there are some considerations you need to think about when you are developing the plan. The following four “rules” are important when you are in the process of creating your trading plan, to ensure that you have the best results. 

Write down your goals all the time. If you make any changes, write that down as well. You will want to write down virtually every single part of your plan. This way, you can ensure that your thoughts are organized, and your plan is solid. It also helps you stay focused on your goals and work towards them with every move you make.

Make sure that in addition to writing out your plans, you record your progress as well. This allows you to see how your plan has worked, and to learn from previous trades that you have made as well so that you can continue to learn and make better decisions. This process will give you a better opportunity to improve your trading strategies and ensure that you recall which markets you have been exposed to. 

Aside from writing everything down, you must control your finances. You must manage your money properly to ensure that you are staying on top of everything to prevent yourself from investing too much in the market. You want to make sure that you are managing your risk and exposure and staying on top of how much you are making and losing in the grand scheme of things.

The best way to keep track of everything is to have a trading journal that allows you to keep track of your plan and all of the moves you make. It also allows you to keep track of your finances to ensure that you are making wise decisions and not investing too much or losing too much in certain moves. 

Decide how much risk is acceptable

The amount of risk that is right for you will be different than the amount of risk that is right for anyone else which is why it is so important to create your plan instead of simply copying someone else’s. To determine the amount of risk that is right for you, you will want to start by determining what the total amount that you have available to work with will be. As a rule of thumb, you should never commit more than 5 percent of the total you have to work with into any single trade as this is a good way to ensure you don’t ever put more into a trade than you can afford to lose. Additionally, many day traders prefer to only take on trades that they believe will pay out 300 times what they cost to buy into to ensure they are being adequately compensated for their time. 

These two numbers are what makeup what is known as a risk/reward ratio and it can be easily determined by simply taking how much you realistically expect to make on a trade and then dividing that number by the amount you have to put down on the trade. Your goal should be results that are higher than 3 if you will go ahead and pull the trigger. This won’t tell you how likely the trade will succeed, however, which is why it is important to understand what your tolerance for risk is before moving forward. 

To determine your level of tolerance to risk, the first thing you will want to do is to consider how much time you will spend playing the market and what types of returns you need to see to make the experience worth your time. The less time you have to spend trading, the more risk you will need to be able to accept to generate the same amount of return. If you don’t like the results, you can either change the amount of time you are willing to commit to the endeavor or the amount you are expecting to get back, there aren’t any other options. 

Choose the right exit and entry points

When it comes to ensuring that you meet your goals, it is important to always go into a given trade with a clear idea of the point that you will either be happy with your profits and walk away or be unwilling to take a greater loss and do the same. While many less-experienced traders will always feel the need to stay in after the signs point that the time to exit has past either to squeeze a little extra from the trade they are currently dealing with, the truth of the matter is that this will lead to a greater overall loss in the long term, guaranteed. The exit points that you choose should be dictated by your level of risk tolerance and should never be changed amid a trade when your emotions will