FTG Blog - Top 10 Trading Secrets for the Beginner

Top 10 Trading Secrets for the Beginner

Day Trading refers to market positions which are held for only a short amount of time; a trader usually opens and closes a position on the same day. Day trading isn’t all that complicated once you learn a simple, rules-based strategy for anticipating market moves. So here are the top 10 trading secrets:

1.) Search for events where supply and demand are drastically imbalanced, and use these as your entry points

If supply is near exhaustion and there are still willing buyers, the price is about to go higher. If there is excess supply and no willing buyers, the price will go down. Join an FTG Live trading session and we’ll teach you to identify these turning points on a price chart.

2.) Set price targets before jumping in

If you want to buy a long position, decide in advance what an acceptable amount of profit would be, as well as a stop-loss level if the trade goes against you. Remember, it’s important to stick by your decisions. This will limit your potential loss and keeps you from being overly greedy if the price spikes to an untenable level.

3.) Insist on a risk-reward ratio of at least 3:1 when setting your targets

One of the most important lessons in stock trading for beginners is to understand a proper risk-reward ratio. FTG trading tutors point out that this will allow you to “lose small and win big” and come out ahead even if you have many losses. Daunting at first, but once you gain experience, risk-reward ratios as high as 5:1 or even higher can easily be attainable.

4.) Always be patient

What makes a successful day trader? They don’t have to trade every day! A trader might be in the market, or in front of their PC, but if they don’t see any opportunities that meet their criteria they may not execute a trade on that day. This practice is a lot better than going against your best judgment out of an impatient desire to “just trade”. Important – plan your trades, and then trade your plan.

5.) Be as disciplined as possible

The last point emphasises that you should always plan your trades and stick to them. If you’ve opted in to join one of our Live Trading Sessions, an FTG trading expert will help you execute live stock trades until it becomes second nature. If you’re trading on your own, impulsive behaviour can be your worst enemy. Greed can keep you in a position for too long and panic can cause you to bail out too soon.

6.) Don’t be afraid to push the “order” or “buy” button

Novice day traders often get mind-blocked by over analysing a chart and can’t act quickly when opportunities present themselves. If you are disciplined and work your plan, placing orders should be automatic. If you’re wrong, your well placed stops will get you out with minimal damage.

7.) Only day trade with money you can afford to lose

Successful traders have a “little bucket” of risk capital and a “big bucket” of money they’re saving for retirement or another long-term goal. Big bucket money tends to be invested more conservatively and in longer-duration positions. It’s not absolutely forbidden to use this money occasionally for a day trade, but the odds should be very high in your favour.

8.) Never risk too much capital on one trade

Set a percentage of your total day trading budget (which might be anywhere from 2% to 10%, depending on how much money you have) and don’t allow the size of your position to exceed it. Otherwise, you may miss out on an even better opportunity in the market.

9.) Don’t limit day trading to stocks

Forex, futures and options are three asset classes that display volatility and liquidity just like stocks, making them ideal for day trading. And often one of them will present appealing opportunities on a day when the stock market is going nowhere.

10.) Don’t second-guess yourself, but do learn from experience

Every day trader has losses, so don’t kick yourself when the occasional trade doesn’t go your way. Do, however, confirm that you followed your established day trading rules and didn’t get in or out at the wrong time.

Are you ready to learn how to day trade? FTG Education offers short Online Trading Webinars and Live Trading Sessions. Click here to find out more.