Best Day Trading Strategies in 2019

Brokers who are successful in the day trading business stick to a set strategy. The more information you secure in advance, the more confidence you have in choosing one stock option over another.

If you are just starting out in the day trading field, creating a plan for yourself helps ensure you are earning more than you are losing with each new venture. Through the process of day trading, you are buying and selling a financial instrument, such as a stock or bond, within the same day. This becomes risky if you are unsure how to approach the transaction. Many new traders opt to utilize an investment software that does much of the guess work and planning for you. However, understanding how it works is beneficial once you have gained some experience.

Before you start looking for trades, set a threshold for how much you are willing to spend and what you are willing to lose. This sets the foundation for the rest of your moves, as you have a clear picture in mind of what needs to be achieved throughout the day. Remaining in this window gives you opportunity to test the waters without risking all your finances. If you want to start day trading in 2019, there are a few general strategies to keep in mind.

Stay Informed

If you are heading into 2019 as a day trader, you must be informed of current stock market trends before you hedge your bets on one investment over another. Not only do you need to familiarize yourself with the day trading fundamentals, but you need to remain informed on the stock market as a whole. Be sure to focus on specific areas, such as the current federal plan for interest rates and what the economic outlook is for the next few months.

The more information you have, the more likely you are to make a knowledgeable investment. If you skip the research on the profitability of a particular company, you risk purchasing stocks for a failing company. Judging companies by their current numbers and not their future projections, is a strategy for loss, not profitability. Both options result in lost money.

Determine How Much You Are Willing to Lose

Before you choose your stock options for the day, create a budget for yourself. Your budget must be reasonably based on how much you currently have in your trading account. By assessing the amount of money you have before making an investment, you can calculate the total loss you can sacrifice to gain a higher profit. For example, if you have a balance of $40,000 in your trading account and determine you are only comfortable with losing 0.5 percent of this balance, you are looking at a loss of approximately $200 per trade you make. If you are comfortable risking more, you can adjust the threshold accordingly.

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By setting aside a percentage of your trading account, you have an accurate idea of how many trades you can make per day before you enter a dangerous financial situation. Most successful day traders risk approximately one to two percent of their trading account over the course of a day. If you want to mimic this level of success heading into 2019, increase your threshold from your current standing to match this percentage and gauge the gains.

Learn How to Time Your Trades

One of the most common mistakes beginner day traders make is being too anxious to start investing. Good investors start early, but you do not need to start investing the moment the markets open. Take at least 20 to 30 minutes every morning to look through the market and assess what other traders are doing. If you rush to be the first to invest, you risk making a poor decision. Studying what other investors do in the beginning is also recommended since it is an excellent learning opportunity and prepares you for future investments.

Once you make your first investment, see how the market is moving before you invest in any other trades. Typically, the middle hours of the workday are the easiest to establish a pattern between investments, as less traders are finalizing deals as the day progresses. The stock market picks up again toward the end of the day, so be sure to make your selections before the prices are thrown off through volatile pricing.

Pick an Order and Stick to It

In day trading there are two orders you can use when you are entering or exiting a trade. These are a limit or market order. Market orders do not provide a guaranteed price for the trade, meaning you are agreeing to pay the best available price at the time of the trade regardless of what it turns out to be. This is risky, as you may end up spending more than you originally planned to spend if the price increases before the trade is executed. As you become more experienced, it is worth considering market orders, but if you are brand new, prioritize limit orders.

When you choose a limit order you get the security of a guaranteed price, but the trade itself is not automatically executed once the best price becomes available. There is risk involved in this as well, since you may lose money on the trade, if the trade is not executed immediately upon guaranteeing the ideal price. If you are inexperienced, a limit order guarantees more accuracy than a market order. As you learn more about day trading in 2019, spend time using both the limit order and the market order to determine what works best for your style of trading.

Regardless of which option you choose, try to stick to your desired order to avoid any confusion. As you build experience, it becomes easier to switch back and forth between the two order types as needed. Once you decide on an order type, consider starting with small investments to get a feel for the market. If you try to invest too much at once, you risk losing everything before you fully understand market trends and changes.

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