| It has been commonly noticed that on an average | | | | different markets generally influence one and another |
| the market fluctuates 2-3% within the span of a | | | | strongly. For example movement in the oil prices |
| single day. There are share traders in the market | | | | might affect most shares favourably or unfavourably. |
| who focus on how to maximise their profits by | | | | Similarly, a big merger or an acquisition might also |
| taking advantage of this daily market ups and downs. | | | | impact share prices globally. A rise in interest rates will |
| These traders are termed as day traders as the | | | | inevitably influence the capital-intensive companies |
| common practice for these traders is not to hold | | | | negatively and on the other hand might be |
| shares overnight and sell them off all on the same | | | | favourable for the cash surplus IT companies. |
| day to avoid risks created by market flurries while | | | | Day traders are often advised to invest in cap |
| the market is still closed. | | | | stocks that have high trading volumes. The reason |
| Day trading can be done with a reasonable amount | | | | being at the end of the day you will not get stuck |
| of investment and does not particularly need a huge | | | | with illiquid stocks. Also be sure to book your losses |
| investment. In order to minimize the chances of | | | | instead of living in the hope that markets will turn |
| losses in day trading one needs to keep certain | | | | around soon. Use the stop loss feature judiciously to |
| golden rules in mind while trading. | | | | limit your losses. The success of a day trader |
| It is advisable for a day trader not to allocate more | | | | depends to a great extent on how he uses the stop |
| than 3-5% of his equity corpus in day trading. That | | | | loss pricing method to limit his losses. |
| way, even in a worse case scenario you would not | | | | Booking profits at regular intervals is also another |
| be losing all. This in turn will give you a chance to | | | | way to succeed. Without trying to forecast the |
| bounce back and try again in case of any short-term | | | | market situation or assuming things, it is better to go |
| set back. | | | | for small profits intermittently. |
| Now with the advancement in technology a day | | | | Moreover, always remember that your mental |
| trader's life is made manifold easier. Most of the day | | | | makeup has got a lot to do with your profits and |
| traders resort to the easier ways of trading, entering | | | | losses. Mental discipline and emotional balance are |
| and exiting the market on the basis of decision taken | | | | important requirements when your deal with share |
| by closely following the 24 hours stock market | | | | market forces. Losses should not intimidate you and |
| tickers and news channel analyst reviews. They | | | | also concurrent profits should not make you |
| usually do not take the pains of analysing the charts | | | | overconfident. No two people with same set of |
| and data also available online and take time to | | | | stocks and information will make same amount of |
| interpret the available information. Correctly studying | | | | money. It is their mental framework, which |
| the stock market fundamentals would do a lot of | | | | determines success or failure. |
| good to day traders in the long run to assess | | | | Another word of caution to the day traders is that |
| situations in a better way instead of fully relying on | | | | they should not overtrade. Markets work on margins |
| the tickers, however tempting they might be. | | | | but this should not a temptation to the day traders |
| Knowledge about all share trading basics such as | | | | to overtrade. Make sure that you trade within your |
| futures, call option, put option, delta, stop loss order | | | | financial limits. |
| and more is essential in order to have a | | | | Another important advise to the day traders would |
| comprehensive view of the global market and the | | | | be that even though day trading is on a day-to-day |
| forces acting on it. This will definitely enable you to | | | | basis, please do not think that it is necessary for you |
| assess the situation better and take well-informed | | | | to trade every single day. If played with full |
| decision. Apart from this it will also help you to | | | | preparation and ground research, a trade per week |
| understand analyst reviews and expert opinions | | | | should suffice. |
| better. | | | | Day trading, even though sounds easy involves a lot |
| A day trader's focus should not be narrow and he | | | | of risks and should be less indulged in as proclaimed |
| should be well acquainted with the market economics | | | | by experts. |
| worldwide. This perspective is essential as the | | | | |