Greg Bolan is a corporate finance professional. In the following article, Greg Bolan explains the basics of day trading, and common strategies.
Playing the stock market once felt like an exclusive club.
It seemed to require an extensive background in business and methodical financial planning for the long term. Being a trader meant working for a brokerage or a big-name financial institution. It was something that other people did.
Then day trading came along.
Greg Bolan explains that with day trading, the focus is on the short term. Day traders sell and buy stocks usually within a day. The goal: scoring a small profit and then capitalizing on it, compounding small wins into massive victories over time.
Sound good? Greg Bolan explains everything day trading first timers should know before getting in the game.
Day traders may work independently but often work through such online brokers as Robinhood and Webull which have made it easy for the average investor to take advantage of the stock market.
Day trading has also flourished with the advent of free or inexpensive traders, as well as fractional share trading, where many investors can own a percentage of a company's share.
Greg Bolan says that stock fluctuations are a day trader's best friend. Day traders often pounce to buy a stock that suddenly moves higher or short sell to capitalize on a stock that's falling. Sometimes, the same stock is traded numerous times in one day.
Day traders capitalize on the high volatility of market sentiment that could change by the minute or hour. That's why many online brokers offer streaming stock quotes and charting tools on their platforms.
Common Strategies
Day trading makes the stock market accessible, but that doesn't mean it makes it easy reports Greg Bolan`.
It requires diligence, patience, and focus. It rewards research, looking at ever-changing stock market events and news that impact stocks, such as changes to interest rates or financial news. It also requires staying informed about companies and any changes in their stocks.
And that's just the beginning. Day trading isn't for everyone, but for those ready to invest for the first time, day trading is a potentially lucrative endeavor.
Essentials
" Learning the Basics
Greg Bolan explains that preparation is key before jumping into day trading. Successful day traders are well-versed on the basic procedures but are also plugged into any and all news that may shape stock market performance throughout the day.
Day traders usually make a list of goals before the first trade. This may include a list of stocks one is interested in or long-term investment goals.
" Start Small
Greg Bolan, and other financial experts agree that day trader beginners benefit from starting out slow, perhaps working with just one or two stocks during trading sessions and spending the day focused on tracking and researching those.
One increasingly popular option is the aforementioned approach with fractional shares, which gives investors more power to start investing smaller amounts of cash.
" Time Management
Day trading is never about making an investment and waiting to see what happens over the course of a few years. Really succeeding in day trading usually comes from devoting large amounts of time to it during the day.
Greg Bolan explains that timing is key. Some day traders wait about 20 minutes or so after the market opens to place orders. Patterns may emerge to help day traders time orders to maximize profits. Stock movement escalates toward the end of the daily stock market session.
The middle part of the day usually comes with less volatility, and beginners may be comfortable working within that time period at first.
" Limit Orders and Market Orders
The method which day traders use to place orders varies as well. Limit orders come with guaranteed prices but no flexibility on when the order is executed. They are often used by traders to cut reversals loss during the day since it allows them to trade more precisely.
Market orders work differently according to Greg Bolan. They offer day traders the option of selling or buying a security right away at what's considered the best price, but not with a price guarantee.
Eventually, day traders feel more confident about which orders work for them and may consider alternative approaches like an options contract.
