Day Trading – So Where to Begin?

The profitability of day trading oftentimes lures people to make a living out of it. But just like in all other businesses- trading is a business and it should be treated as such- there are certain places where you should start. Novice traders are often faced with tough decisions like what trade to begin with? How much risk should be taken? Or what are the futures that suit your trading style best? These questions are of course impossible to answer in one sitting. Even training courses on trading can’t supplement the theories and principles alone but not the flexing of your staying power in the trading pit. It takes experience to acknowledge the realities of this business. However, it helps to know some of the more important issues when beginning to trade.

First of course is the assessment of your money. Not all people have money to trade. And not all money should be traded. Before trading, you have to determine how much money you are willing to risk. This is largely dependent on how much is left after fixed expenses are paid.

In principle, only 10% of your total risk capital should be used in trading. This will leave enough money as back-up money when you are on a losing streak. Also, this will provide enough elbow room to make adjustments in trading styles.

Trading power revolves around how much money you can work with but should be sufficient enough as not to limit the kinds of trades that you want to enter. The truth is, the less money you have the more afraid you are to make decisions. Thus the lesser chances on getting some of the good trades.

Another point to consider is the type of market you want to enter. For most people, this is pure common sense- you only enter the waters that you are familiar with. You cannot blindly take trades without prior knowledge of their nature and hope that such a trade would work for you. Some people do get lucky sometimes but this is not true for everyone. You have to study the trades first because, this will eliminate unwarranted losses and second, this will increase the possibility of profiting.

Lastly, you have to understand the technicalities of day trading. This business is highly technical however information can’t be gathered just from experience but also from training courses, books and supplementary resources.

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