A Day in the Life of a Day Trader
The life of a day trader often sees highs and lows in the span of a single day. Unexpected events may result in a sudden windfall or serious pitfalls. But in reality, day trading is like any other profession that has its rewards as well as hazards. An experienced day trader would not let any excitement affect his trading ethics, except in unusual circumstances.
The primary thing for day traders is to know how to invest in share market. After all, day trading involves the purchase and sale of a security within a single trading day. Short-term trading strategies are needed to take advantage of even the smallest price fluctuations in highly liquid assets. To be able to formulate such strategies you must have a good grasp of the share market basics. It is also important to open an account with a good stock broking company like Kotak Securities to begin day trading.
There are mainly two methods of day trading—discretionary and system. Discretionary traders use a decision-based strategy. They analyse stock markets and place the purchase and sale orders manually. They do this in keeping with available data. System traders make use of digital tools to understand markets and place orders accordingly. They rely more on the data and research material than their own decision-making capacities.
As a day trader, you can either use a discretionary method or a system method. Your choice depends on your level of experience and understanding of the share market.
Life of a day trader
Day traders usually work from home. So, it is important to be well-organized so as to make the most of your time. Here are a few things you must do as a day trader during a typical working day:
- Checking in daily and putting in the hours: Discipline is the first pillar of success in day trading. You must get to work at least one hour before the markets open. You need to check for the day’s major financial events. Do make sure the platform you trade on is working properly. You have to keep a tab on the trading account balance. Ideally, you should risk about 2% of the account balance on day trades. You can use different charting tools to monitor the prevalent market trends.
- Studying research reports: Successful day traders indulge in extensive research work when they are not selling or purchasing stocks. Apart from becoming familiar with the share market basics, you need to monitor different share markets and look at the media coverage of the markets each day.
- Review: At the end of the trading day, you need to analyse everything you did during the day. Take a screenshot of your computer screen. Highlight the key points like the hours of trading, the winning and losing trades, the net profit made, etc. Assess these images and points very closely over the weekend. Be aware of the stock trading mistakes you are making. Avoid them while making trades in the following week.
Remember, day trading isn’t always a roller coaster ride. The stock market is not a place where you should seek thrills. Stay focused during trading and review your trading decisions every week. As with every other job, extensive research and constant practice will help you hone your skills. The key is to pick the most efficient strategies and take quick decisions based on your experience and knowledge.