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“The lure of successful day trading can be overwhelming, but before you jump in you need to make sure that you are prepared for the many daily problems traders face”.

Successful day trading requires hard work and discipline as well as a trading plan that will allow you to be successful in the long run. Not only do you need a strategy that will allow you to consistently make money over time, but you also need to diversify the assets you trade and have a strong trader mentality. Here are 5-Tips to become a successful trader.

Day trading describes an activity in which an investor starts a position and closes that position within the same trading day. The idea is to avoid carrying positions overnight and therefore eliminate the risk that the price loopholes against you without having the control to stop exiting your positions during active market hours. While there are many securities such as forex that trade 24-7, products such as equities have specific market hours and are subject to market price gaps.

When you’re trading, it’s important to find a strategy that fits your trading personality. There are two different types of trading strategies, discreet and systematic. Wisdom strategy is one in which you make all trading decisions based on a few factors that you believe are important to come up with a successful trading strategy.

Also Read: History of Forex Trading
A systematic strategy is one in which you don’t use discretion. You use a systematic approach where signals are generated to initiate your position and signals are generated to exit your position. Your risk initiation and risk management are handled entirely by the system you use.

If you decide you want to use a system you developed or purchased, make sure you understand all the nuances before implementing your strategy using real capital. This can include backtesting using historical data as well as, forward testing in a real-time environment using demonstration accounts.

If your strategy is a discretionary strategy, find one that fits your trading personality. If you are a breakout trader and like to catch trends, avoid using an average return strategy where you buy on the downside and sell on the rallies. You don’t want to stop just because the market is moving against you. You have to choose a strategy that fits your comfort zone.

One of the problems day traders face is that you need market volatility to generate returns. If the market stagnates and moves sideways, it will be very difficult to make money, especially if you concentrate on only one asset class. For example, if the dollar is in a limited range, it may trade sideways against all major currencies, making it difficult to trade the forex market.

One of the best ways to avoid a stagnant market is to find a moving market. This can include commodities, equities, equity indices, and debt. You should find a reputable broker like markets.com that can provide trading across multiple asset classes.

In addition, by diversifying your portfolio, you will experience uncorrelated price changes. This means that not all assets are moving in the same direction at the same time. You will then be able to use multiple trading strategies against multiple assets at the same time.
When you trade, you must remember that investing is a business. It requires a plan that needs to be executed. It is important that you avoid putting your plans aside during the middle of a trading session, and only return to the drawing board when you realize that your plans are inappropriate.

Part of trading is losing money and the goal is to make more money than you lose. No trading strategy makes money all the time, and you need to find a way to reduce your losses and let your profits run.

If you feel frustrated every time you lose money, and you change your strategy to avoid losing money, there is a good chance that you will actually reduce your chances of making money.

If you have a stop loss level that you have calculated, let the market reach this level and avoid exiting early because you can’t stand losing money. One of the worst mistakes novice traders can make is cutting trades before they play.

Like any business, the internet is the bottom line. If you spend more money than you make, your trading business will not be profitable. This includes ensuring the fees you pay for trading the markets will allow you to make a net profit.

For example, if your strategy is to peel the market and make a profit of 0.25% of your profit without losing more than 0.25% of your loss, but your commission is 0.1%, you must win 70% of the time for the strategy to reach break even point. Here is the calculation on 10-trades: commission = 10 * 0.1% = 1%, winning trades 0.25% * 7 = 1.75%, losing trades 0.25% * 3 = 0.75%. Total = 1.75% – 0.75% = 1% minus 1% commission = zero.
Another way to keep costs low and increase your account is through Contracts to trade different CFDs. A contract for difference is a security that allows you to trade the difference in the price of an asset without owning the security. This is a useful way to speculate on instrument fluctuations with minimal investment.

It is also important to find a trading platform that is easy to use and provides all the tools you need to generate income. Make sure you find a broker like markets.com that offers a lot of tools like charting and technical analysis tools. Also look for a broker who will provide you with multiple assets to trade along with the latest news and analysis.

Before you take the risk and start trading using real capital, make sure you make trades that you are comfortable with. You need to find a broker that provides you with multiple assets to trade with as well as a low cost trading environment. It is also important to find a platform that is easy to use and has advanced tools that will allow you to make sound trading decisions.

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