Many Australians trade commodities online and that includes trading stocks and shares on the ASX (Australian Securities Exchange). In this short article, we offer the novice day trader a few top tips from seasoned traders. Day trading, as the name suggests, means buying and selling shares in a single day, which demands a high level of knowledge.
- Source an established trading broker – In order to trade shares in Australia, you need to partner up with an established trading broker, one with considerable day trading experience. Ideally, you want a broker with low transaction fees and fast order execution and once you are ready, put funds into your trading account.
- Start with small positions – Begin trading with small positions as this limits your losses; day trading demands that you are constantly aware of market fluctuations and changes. Always review your trades, which can help identify mistakes and it is a good idea to check your learning resources.
- Stick to stocks that you are knowledgeable about – Day trading is risky enough at the best of times, let alone trading in unfamiliar markets. Knowledge is everything in trading shares and having no real understanding of a sector or market is definitely an obstacle to successful trading.
- Be disciplined with time management – Day trading demands total concentration at specific times, especially before you start trading. Be aware of the trading hours and keep track of time so you don’t miss closing your position.
- Create a trading plan – Your trading plan should identify your trading goals and regardless of what happens, always stick to your plan of action. If you need any help regarding trading plans, your broker has all the resources you need to gain a deeper understanding.
- Reflect on investment behaviour – For a day trader, it is crucial to reflect on investment behaviour, which helps identify patterns and learn from previous mistakes.
- Emotion has no place in trading – Ask any seasoned day trader and they will certainly confirm that emotion has no place in the trading profession. You need to be calm and not emotionally connected to your trading activities; another way of putting it is, your head should rule your heart.
- Stay away from penny stocks – Low-priced stocks may seem appealing but trading penny stocks should be left to hardened day traders. High volatility and lightning-quick trading make it that much harder to turn a profit; sure it might seem tempting but wait until you have some experience.
There are a lot of resources on the web to help you learn more about day trading and let’s not forget that your broker has many resources that are designed to assist novice traders in all markets. We hope the above tips go some way towards helping you get your feet planted firmly in the global trading markets.
