Day trading is buying and selling a financial instrument within the same day or multiple times over a day. It can be a profitable game for you, but it can also be dangerous for beginners who do not adhere to a well-thought-out strategy.

We have compiled helpful tips for newbie traders to help secure your assets and succeed.

Tip 1: Knowledge is power

Day traders must keep up with the latest stock market news and events affecting stocks. This can include interest rate plans, leading indicator announcements, and other economic, business, and financial news. Keep informed about the selected companies, their stocks, and general markets. Scan business news and bookmark reliable online news outlets.

Tip 2: Set aside funds

Assess and commit to the amount of capital you’re willing to risk on each trade. Many successful day traders risk less than 1% to 2% of their accounts per trade. Earmark is a surplus amount of funds you can trade with and are prepared to lose.

Tip 3: Set aside time

Day trading requires a trader to track the markets and spot opportunities that can arise during trading hours. Day trading requires your time and attention. Don’t consider it if you have limited time to spare.

Tip 4: Avoid penny stocks

Many stocks under €5 a share become delisted from major stock exchanges and are only tradable over-the-counter (OTC). Unless you see a real opportunity and have done your research, steer clear of these.

Tip 5: Cut losses with limited orders

Limit orders can help you trade more precisely and confidently because you set the price at which your order should be executed. A limit order can cut your loss on reversals. However, please be aware if the market doesn’t reach your price, your order won’t be filled, and you’ll maintain your position.