We’ve done some content on day trading in these blogs before but just as a refresher, day trading is essentially short-term investing in which a trader (or investor) will buy and sell a stock, asset or financial tool within the same trading day.
Compared to traditional long-term investing, there seems to be a distinctly lesser degree of understanding when it comes to day trading, as this area of investing is often viewed as more volatile and risky than its typical, more well-understood counterpart.
To help shift that reality and improve the general level of financial literacy around this topic, this blog is going to provide what we at Explorer Hop believe to be three of the most key tips that new day traders should focus on when they are learning how to invest before they start actually engaging in this practice.
Read on to find out these tips (in no particular order).
1. Assess and Manage Desired Risk Level
Like we mentioned above, there is a certain level of risk in day trading that may not be present in typical investing. Accordingly, we believe that it is important to consider, define and assess the level of financial risk you are comfortable with before you begin day trading. In other words, we recommend defining just how much money you are comfortable risking as a day trader and using only that amount of money when you actually begin this practice. The key here is to only risk what you are comfortable and can afford to lose so as to not jeopardize your general financial wellbeing if day trading does not prove fruitful for you.
2. Do Some Research
It is impossible to properly articulate the importance of research prior to engaging in day trading. Research will accomplish many things for you prior to the start of your journey, including helping decide where to and where not to spend your money, the best time to buy and sell a given stock etc. This background information you gather through research will give you a strong base understanding and level of financial literacy as it relates to what you are getting into before you dive head first into this practice, which will also help mitigate the risk we discussed in the previous section.
3. Have A Plan
An extension of the research we talked about earlier, having a plan on paper with respect to such things as what stocks to buy, what stocks to avoid, what stocks are safe versus risky and having both entry and exit plans (when to buy and sell certain stocks) for the stocks you intend to buy and sticking to this plan is a crucial tip that we like to make sure everyone has covered with respect to day trading. Due in large part to the volatility of day trading, it is more important in this area of finance than many others to have a defined plan so that you are not scrambling to figure out your next move as things change in real time once you begin actually involving yourself in this world. Simply put, a defined plan of action will reduce stress and fear when and if you actually decide to become a day trader, and this will make your life exponentially easier moving forward.
Hopefully the three tips we have provided here today help set you up for a potential journey into day trading if that is the route you choose for yourself in the not-so-distant future.
However, we also hope that these tips are ones that you can pass on to your young children, because we at Explorer Hop believe strongly in igniting the passion for financial literacy in children from an early stage in their lives and we think that tips like these can help accomplish that.
Further to our blogs though, we believe so strongly in the importance of childhood financial literacy that we also offer a technical analysis and day trading program that takes children through a fun and easy-to-understand class that will demystify day trading, simplify otherwise complex technical and fundamental analysis terms and thoroughly explain various trading techniques.
Simultaneously, this course works at providing your child and other young investors with tips and indicators on various graphs, all knowledge that will prepare them for a future in day-trading should they choose to go down that path.
If this sounds like something you believe could benefit your child in the present and the long-run, visit our website now and sign your child up today!