Updated: Nov 17, 2019
First of all, Who is a Day Trader? A day trader is a trader who adheres to a trading style called day trading. This involves buying and subsequently selling the stocks before the market closes. ( 09:00 a.m. to 03:30 p.m.). You can also become a Swing Trader by following these steps.
How Day Traders make money?
Bought the stock at 100 Rs. and sold at 120 Rs. and the profit is 20 Rs. ( Excluding brokerage) and vice versa.
Of course, this needs expertise, If you are buying and selling the stocks on the same day and still making profits then you must have some uncommon skills.
10 Steps can make you a successful day trader. (No age limit).
1. Open Zero brokerage Demat Account:
You need to have a Demat account with zero brokerage. In this competitive market, some of the good brokers are providing this service of ‘free brokerage’. I use Upstox, you can use it too if you want. Otherwise, Choose any broker you want. Know more about Upstox here Upstox features:
1. 0 Brokerage charges for all delivery trades (No hidden charges)
2. 100% paperless a/c opening using Aadhar.
3. Trade in Stock, F&O, Currencies & commodities.
4. Account activates in just 3 hours.
5. Pay only ₹20 per order for Intraday.
6. 20X margins on Equity trades. 4X margins on Futures & Currencies. 1.33X margins on buying Options.
7. Place Buy/Sell orders & see order/position books directly from charts. 100+indicators to help you analyze the markets!
8. Interactive web interface and easy to use free mobile app.
9. Get a FREE stock after opening the account.
10. Advanced Options strategies Profit from advanced options strategies including Straddle, Strangle, Butterfly. Place orders using options strategies directly from Pro trading platforms.
2. Learn ‘Technical Analysis’:
It doesn’t matter how desperate you are, you can not expect a tree to give you fruits until it grows to that extent. Likewise, You need to learn Technical Analysis (Know more) and give some time to properly learn all the techniques. Technical analysis focuses on a stock's historical price pattern, as portrayed on charts, to predict future price movements.
What is Technical Analysis?
It is more about the forecasting of future price movements of the stock based on an examination of past price movements. Like weather forecasting, although it does not result in absolute predictions about the future. Instead, technical analysis can help investors anticipate what is “More likely” to happen to prices over time. Technical analysis is been used by millions of investors that use a wide variety of charts that show price over time. This is the last stage of learning stock market. ( Know more about Technical Analysis)
Suggestion: Use 5 mins or 10 mins chart while making the trades.
3. Follow someone, Practice and get the expertise.
These masterminds may have died (or maybe not) but their inventions definitely didn’t, they gave all their lives just to justify their points and what we have to do is to just read it, understand it, understand it a little more, experiment it on Indian market, observe and observe bit on a higher side and transfer their expertise into ourselves. 4. Prove your methods before you trade with your Real Money:
Just before you trade with real money, try the virtual trading platform for free. Websites like moneybhai or moneypot give you 10 lakh virtual rupees to trade in the real live market. Test your strategy again and again and then join the battlefield.More or less it is a battle between two people. In the stock market, if someone is making money then someone must be losing it.
5. Create a Day Trading Routine to Avoid Mistakes:
Create a routine for the trading day. A routine includes getting up at the same time each day, starting to trade at the same time each day and checking for scheduled economic data releases that may affect the market.
Quit trading at the same time each day, and then have a routine for reviewing all trades taken. In terms of each trade, have a checklist you run through to make sure that each trade aligns with your trading plan.
6. Create a Mental/Physical Checklist That Each Trade Must Satisfy:
Not a big deal, just a copy, and pen, that’s all! write down the stock names which you are monitoring all day. I still have that picture when I used to make the list of stocks that I was willing to trade (either in swing trade or intraday trade). You can excuse me for my handwriting :)
I used to make these stuffs in my early days as a trader.
When watching a price chart it is easy to get distracted from the trading plan. Prepare a checklist to run through before every trade. The checklist makes sure that the trade meets all the specifications laid out in the trading plan. It only takes a second to mentally go over the checklist and can save a trader from many bad trades.
7. Utilize a Stop Loss Order and limit your risk to less than 1% of Capital Per Trade:
Know your limits, how much you can afford to lose. Stock Market is not a monster, it works on your wish. So, be careful when you think about your profits and losses and the market will respond to you accordingly. once you have set your limit, the downside will be minimum. Once downside is limited then who can stop you?
1% of the account should be your account risk. The difference between the trade entry price and stop loss price is the trade risk. Trade risk, multiplied by the position size, should be equal to or less than the acceptable account risk (one percent of the account).
8. Watch Movies related to stock market investments:
You believe it or not but after watching these movies you will fall in love with the financial market and will make every attempt to make yourself ‘The most successful Trader/Investor of the world’
Top 5 Best Finance, Stock Market Movies:
1) Inside Job (2011)
2) The Big Short (2015)
3) The Wolf of Wall Street (2013)
4) Margin Call (2011)
5) Floored (2009)
9. Weekly Monitoring:
I applied this strategy, It worked! — Noted
I applied this strategy, It didn’t work! — Noted
I applied this strategy to less volatile stocks, it worked — Noted …. and so on!
Trust Yourself, Your Research and Your Practice.
A review is critical to long-term success. Without review sessions, a trader can’t see the overall picture of what they are doing well and what they are doing poorly.
Each day, take a screenshot of your chart with all your trades marked on it. At the end of the week, review the charts for the prior week and note deviations from the trading plan. Note any areas of the trading plan that could be improved. Write down a plan for how to implement these improvements. At the end of each month, review your weekly plans and note whether you have made progress on these or not.
10. Read and Research.
Stock Market trading is not just all about trading stocks. You must know what’s happening in your surroundings. Price of Brent crude, Fed rate hike, Political conditions, USFDA inspections, Monetary policy, Fiscal policy, Macroeconomic and microeconomic data etc.
Because it is suggested to trade only fundamentally strong stocks because in case it goes down and you forgot to place the stop loss then you may have to hold it for long-term so be aware of the numbers which are there in its balance sheet, P/L statement and cash flow statements.
Note: Without proper knowledge about the stock market never try to dive in. With every good thing, there is a dark side, the Indian stock market is the fastest wealth destroyer also in case you invest without proper knowledge about how it works. Here, if one is making BIG means on the other side somebody is BIG.
Pure determination will make you a successful trader.
See this guy, he still reads 500 pages in a day. Can you do that?
Open Free Demat account: Open here