After 2020’s market insanity, you may be on the hunt for the top strategies for day trading stocks.
Last year we talked a lot about day trading stocks, and with good reason … but no market lasts forever, so you need to be prepared for anything.
From the dip at the start of the pandemic to the record highs at year-end, the 2020 market was memorable. It’s no wonder so many people took notice and started day trading stocks.
If you’re one of them and new to the trading game, you may be looking for strategies that could help you become a smarter day trader in any market.
With so many strategies out there, I’ve decided to give you a list of the ones I think can help any trader. Whether you’ve been trading for 10 days or 10 years, these strategies could help improve your day trading skills and abilities…
Let’s jump into it!
Table of Contents
- 1 What Does Day Trading Stocks Mean?
- 2 How Does Day Trading Work?
- 3 How Do you Start Day Trading Stocks?
- 4 Day Trading Stocks: 7 Strategies You Need to Learn
- 5 How to Find the Best Day Trades
- 6 How to Pick the Best Stocks for Day Trading
- 7 Where Can You Day Trade Stocks?
- 8 How to Set up a Day Trading Account
- 9 How to Make Money Day Trading?
- 10 Frequently Asked Questions About Day Trading Stocks
- 11 Conclusion
- 12 One Platform. One System. Every Tool
What Does Day Trading Stocks Mean?
So first, what exactly is day trading? It’s just that: buying and selling a stock within the same trading day.
Day trading stocks is a short-term strategy to take advantage of volatile price movements that usually occur in stocks with high liquidity.
Sometimes a day trade will carry into the next trading day — but this isn’t usually the case.
There are many different strategies for day trading stocks. We’ll get to that in a bit. First, some basics…
How Does Day Trading Work?
Day trading stocks is like any other kind of trading. Buy and sell orders work the same as if you were in a longer-term position, like a swing trade. The only difference is you buy, sell, and execute a day trade all in a single trading day.
The goal is still to buy low and sell high but in a much shorter window. A day trade could last 15 minutes, or it could last an entire trading day. It really depends on the setup.
As a trader, you need to have a proper strategy, a good scanner, and solid goals in order to consistently find good setups for your account.
Not sure which scanner to use? Consider StocksToTrade. It has built-in top-level customizable scanners and a lot more. Sign up for a 14-day trial for just $7, and you’ll see why so many traders love it.
How Do you Start Day Trading Stocks?
So how do you get started day trading stocks? Here are some tips to help get you on your way.
I can’t stress this enough…
If you’ve been reading these blog posts or watching any of our thousands of free videos on YouTube, you’ve heard me talk about how important studying is. Before you consider your first trade, before you even set up your trading account, you should study.
Learn about the market, trading strategies, setups to watch, terminology — learn about everything! Use the thousands of free and no-cost resources you have access to through StocksToTrade.
Study up and make sure you’re prepared.
#2. Develop a Trading Strategy
No matter how long you’ve been day trading stocks, you need to have a plan.
New traders often don’t know where to start. That’s why I created this free guide.
You might think day trading stocks is scary and complicated, but with a proper trading strategy, it doesn’t need to be.
Some top traders consistently go back to the same strategies and the same plans that work for them, over and over again. The strategies may evolve as the markets change, but the core ideas remain the same.
#3. Paper Trade
Before you risk real money, set up a paper trading account.
Paper trading is simulated trading, using fake or ‘paper’ money. You can open a paper trading account at almost any brokerage. It’s a way for anyone who wants to test out trading to see how their trading strategy would perform in real time.
Paper trading is also a great way to develop your trading skills and gain confidence day trading — without risking a dime of your own money…
Practice, practice, practice, and develop your perfect strategy.
#4. Set Goals/Limits
It takes time to learn how to successfully day trade stocks — there are many ups and downs along the way.
Part of developing your trading plan is setting realistic goals, as well as limits on the amount of money you’re willing to spend — and potentially lose — on day trading.
Limiting your losses and maximizing your gains will help you develop your trading skills and grow your account. Remember, sometimes a small loss is a win.
#5. Set Up an Account
Before deciding which brokerage to use, you should consider which type of account you want to use to start day trading stocks.
You’ll need to decide if you want a cash account or a margin account. Both will allow you to execute day trades — but there are huge differences between the two.
With a cash account, you pay for the stocks you buy using the money available in your account.
With a margin account, your broker lends you money to buy stocks. The brokerage uses your account as collateral for that loan.
If you have a margin account, you can short stocks or trade futures and options — things you can’t do with a cash account.
But before you decide whether you want a cash account or a margin account, take a look at your trading strategy and your risk tolerance.
Day Trading Stocks: 7 Strategies You Need to Learn
#1. Start Small
When learning to day trade stocks, you need to walk before you run.
What does that mean? Well, when you’re just starting out, consider trading smaller positions and only use a small amount of capital.
There are plenty of horror stories of traders quickly blowing up their accounts. Those traders usually end up losing big, and some never recover.
The sad part is they could have learned the same lessons if they’d only traded with a $1,000 or $2,000 account. Don’t become a cautionary tale…
If you’re a new trader, I recommend you start with a small position. When you improve your skills, build confidence, and develop consistency, then you can think about bigger moves.
#2. Do Your Homework
I hate homework, and you might too. But for a smart trader, it’s a necessity.
Now don’t close this page just yet, because trading homework can actually be a lot of fun.
Bear with me for a second…
Trading homework is what you do after the market closes or before it opens. It can include analyzing the biggest percent movers of the day, researching new trading setups, reviewing your trades, or working on your trading emotions…
Trading homework is one of the biggest reasons for my trading success. Find your groove and get to work!
#3. Wait for the Best Setups
Newbie day traders have a tendency to see potential trades everywhere. They’re tempted to jump in and out of all kinds of trades without direction or a plan.
That likely ends in a bunch of losses — and a ton of commission fees depending on how and what they trade.
Seasoned traders generally don’t trade like this. Instead, they trade like snipers. Sometimes, that means sitting out while you wait for the right setup for your strategy.
I do a daily live stream on Instagram dedicated to day trading setups. It’s the Pre-Market Prep at 8:30 a.m. Eastern — check it out here and sign up for updates! (You can also find it on the StocksToTrade YouTube channel.)
If you can develop patience and wait for a great setup, you’ll soon become a smarter trader.
#4. Have a Trading Plan and Stick to It!
When you’re planning to start day trading a stock, think about it like building a house…
You have blueprints, a plan for the whole project, a timeline, and a strategy for how it’ll all come together in the end. Things may change, but generally, you stick to the plan.
A good trading plan will include nearly every decision you could make while you’re considering stocks to trade.
It can include what setups to look for, what types of stocks you trade, how much you risk, and how you plan your exit.
No matter how wild the markets get, try to stick to your trading plan.
#5. Learn From Other Traders
Day trading stocks can be lonely at times. You sit in front of your computer alone for hours each day.
I attribute a big part of my success over the years to my daily interaction with other traders. It makes trading more enjoyable. And seeing what others are doing and what’s currently working in the markets is important to my ongoing growth as a mentor and trader.
I recommend that you try to build a network of traders you can relate to. One of the best ways to do that is to join a trading community.
If your focus is U.S. stocks, consider joining the SteadyTrade Team. You can hear the analysis I share with members twice a day. You’ll also have access to cutting-edge webinars.
And — there’s a chat room where you can share experiences with other traders. This can be a great way to get a crash course in day trading strategies and more. No more guessing at trades!
I can honestly say the SteadyTrade Team is one of the best educational resources for trading around. Come and join us today!
#6. Keep Up on News
If you want to be a smart trader, you need to be in the know. Reading up on the day’s news is an essential part of preparing for a trading day — I can’t stress this enough.
What’s the best way to catch the latest breaking news? Simple — it’s the Breaking News Chat. This is an add-on feature for StocksToTrade subscribers. It’s a chat room run by two seasoned pros who scan market news all day looking for items with ticker-moving potential.
The chat feature makes it easier to stay on top of the most pressing news stories.
I love this feature, and I use it every day. It’s now a part of my trading day.
#7. Risk Management
Risk management is a crucial part of day trading. Without it, your next day trade could be your last!
Too many newbie day traders don’t seem to understand how important risk management is.
If you don’t have your limits, stops, and entry and exit plans figured out before you get into a day trade, you could be setting yourself up for failure.
Think about your risk/reward and plan with trade.
How to Find the Best Day Trades
I recommend using a scanner to find the best day trading opportunities.
A stock scanner is software that can help you search for stocks using the exact criteria you set for your strategy.
A great scanning tool, like the one built into the StocksToTrade platform, can help you find the best day trading opportunities that fit your trading plan.
StocksToTrade gives you one place, one program to scan for stocks. You can scan using almost any criteria — whatever indicates a great trade for you.
A 14-day trial of StocksToTrade is now just $7 — try it today! Or get it with the game-changing Breaking News Chat add-on for $17.
How to Pick the Best Stocks for Day Trading
There are a lot of things you can look for that could indicate a good day trading opportunity.
While you always want a stock that’s making big moves premarket, you also always want to look for stocks to trade that fit your trading plan.
Primarily you want to look for a catalyst, low float, and big volume.
All this can tell you if a stock might be worth watching.
Where Can You Day Trade Stocks?
If you peek at a day trader’s computer screen, you’ll probably see a bunch of stock charts.
Most day traders track potential trades through charts and watch as stocks move throughout the day. So while you’ll execute your trades through your broker, it’s important to consider how you’ll analyze them.
The best day trading platform for me is definitely StocksToTrade. I use it every day and it now offers broker integration with several brokers. It’s designed by traders and a powerful trading platform. Check out that 14-day trial for just $7. Or add the Breaking News Chat and get both for just $17.
How to Set up a Day Trading Account
Setting up an account for day trading is like setting up any other trading account.
First, decide on your trading goals and if you’d like to open a cash account or a margin account. It’s an important decision, so take your time and do your research.
Choosing the right broker is also important. You want a well-known, credible, and reliable brokerage service you can trust.
Do your research to find the brokerage that best fits your needs.
How to Make Money Day Trading?
You can make money day trading stocks just like you can with long-term position trades…
The difference is that with a day trade, you’re looking for something volatile that you can get in and out of and take potential profits within the same day.
Remember to take profits when you can — don’t be greedy.
A small gain is better than a big loss. You’re looking for quick trades in stocks with some sort of news, catalyst, or volatility.
If you prepare, take the time, study, and work on your trading skills, you could become a smarter, more profitable trader day trading stocks.
Frequently Asked Questions About Day Trading Stocks
How Do You Get Good at Day Trading?
How do you get good at anything? Practice, practice, practice. I can’t say it enough. Take your time, study the charts, wait for the right setups, and stay disciplined. The more you trade, the more you’ll learn, and the smarter you’ll become. Build a watchlist with stocks that have the potential for trades down the road. From there you can monitor and make trades.
What Are the Best Stocks to Day Trade?
To find the best stocks to day trade that fit your setup, I recommend using a scanner like the customizable one found on StocksToTrade.
You want to look out for stocks that are making big moves premarket, with a catalyst, low float, and big volume. These are the indicators that could signify a good potential day trade. Remember, you also want to look for stocks to trade that fit your trading plan.
Can you Get Rich From Day Trading Stocks?
Sure, it’s possible. But trading isn’t easy, and nothing is guaranteed. Don’t get caught up thinking about how much money you could make. And never assume that you’ll consistently make the same amount every day. Always know the risks, and be prepared for anything.
Can I Day Trade With $100?
You can begin day trading stocks with any amount of money. You just need to understand your risks. Be smart, start small, and always limit your losses.
How Can I Day Trade With Less Than $25K?
Don’t worry too much about the size of your trading account when you’re getting started. It’s more important to build your skills, focus on your setups, and hone your trading strategy. Keep a journal of your trades. Track your progress.
How Can I Learn to Day Trade Stocks?
You learn by doing! Start small or start with paper trading. Take all the tips and ideas in this article and put them into action! Remember to trade smart. You can use any of the thousands of free resources available to you through StocksToTrade, including videos, blogs, the TWIST podcast, Pre-Market Prep, and more…
It seems like nearly everyone wants to be a day trader today, and with the wild year we had in 2020 … who wouldn’t?
There are trading opportunities everywhere. You need skills and experience to find the right ones for you. Too many people don’t know how to do that.
If you follow the day trading tips and ideas in this post, they can help you on your way to becoming a smarter day trader. Trading isn’t complicated. It can be fun and even simple with enough preparation.
Now get to it! Fire up your trading platform and start mastering your go-to day trading style.
Don’t have a trading platform yet? We’ve got you covered.
Get your 14-day trial of StocksToTrade for just $7 and see how it can help boost your trading day.
Which stocks are you looking to day trade? Tell me in the comments below!
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