1) Create a written intraday trading plan. – Without out it you’re cannon fodder for more capable intraday players. You need to know exactly what it is you’re going to do ahead of the session starts, each and every day. Whether you want to day trade stocks, Emini futures, commodities, or whatever else, it doesn’t matter. For instance, if the master plan is always to trade momentum or breakout stocks, you’ll certainly need to know precisely how you’ll scan for or locate those stocks to trade. How can you enter trades? Market orders, limit orders, buy-stops? How can you exit trades? Are you going to use price targets, trailing stops, or several other exit strategies? Will your trading plan primarily use price indicators/oscillators or can you use pure price action to initiate your trade entries and exits? You will have to know answers to all of these questions ahead of trading with real money and really even before to apply on a trading simulator. Which brings me to my next intraday trading tip.
2) Start with a trading simulator first. – Don’t even think of day trading with real money before you have become consistently profitable on a top-quality trading simulator first. What’s the idea of rushing things by setting up a per day trading account and immediately needs to trade with real money? That’s what fools do. Keep your trading capital safe, by trading with sim dollars before you have good, intraday trading tips consistent results from the simulator and enough confidence in your trading want to execute trades without concern with inevitable losing streaks.
3) Start with a sufficient account size – For day trading stocks, as a result of SEC’s pattern day trader rule, most brokers will demand at the least $30,000 to open per day trading account. But, you need to expect a drawdown in your account, as you will soon be just beginning and probably will soon be making mistakes. So, in reality, you actually must look into starting with at the least $40,000. This should be money that you or your family does not require to pay for living expenses.
4) A Stop order should really be used on every trade – No exceptions. This is probably the main tip I can give you. Unless your trading plan includes some type of counter-trend or pair trade which allows for multiple entries at different price levels if price moves against your position, you should always use a stop. Otherwise, what’ll happen may be the trade that you intend on only as an intraday trade will probably soon turn into investment and you will end up without some trading capital.
5) Understand and use Position Sizing – One mistake that many novices make is to place all their trading capital and often a lot more using margin, on only one trade, stock or strategy. Using the most basic position sizing technique simply requires one to split up your account into several blocks of money to buy or short individual stocks or use the split capital to trade different strategies. Trading with too many shares on a single stock or strategy opens you up to an excessive amount of risk from possible losing streaks.
Successful intraday trading tips require knowing a whole lot more than what I’ve presented here, but these five tips are absolutely essential for a newcomer to learn before trying to make a profit the shark-infested waters of today’s markets. I’d like to make you with one last bit of day trading advice, don’t take profits too soon. Another huge mistake that novices make, is thinking that it’s OK to make a profit irrespective of how small, as long as it’s a profit. Wrong! Many, if not most traders generate income by trading strategies or systems that have a win% of 50% or less. Therefore, your average winning trade will probably have to be substantially bigger than your average losing trade to make a general profit. This is only possible if you’re patient enough to let winning trades run.