Day Trading Canada: Useful Tips To Get You Started

A trader is someone who buys and sells all kinds of financial products in a stock market. Traders do so in order to put themselves in a position to make serious financial gains. There is a lot that goes behind becoming a successful trader and it is impossible to cover all of that in one article. But we will give you some useful tips that will help you get a broad idea of the world of day trading in Canada and set you on a path of trading success. Let’s get started.

Day Trading Canada: Useful Tips and Tricks

How to do day trading?

Before you do anything else, familiarize yourself with the five essential themes for day trading:

  • the role and choice of the broker
  • the different existing trading styles and the one that is most suited to your personality
  • the different assets on which to position yourself and the absolute need to determine which ones you will favor
  • the times when you can trade and what this implies in terms of the choice of assets
  • the placing of orders and the various solutions that will allow you to be as secure as possible your positions.

Useful tips for day trading in Canada

Stick to a well thought out trading plan

A trading plan allows you to know how to act in each situation because you will have thought about it before. There is nothing worse than making a decision in the heat of the moment. Would a businessman have the idea of ​​starting a business without establishing a business plan first?

Your trading plan should also allow you to set achievable goals. To begin with, a beginner should set only one goal: not to lose. You can set small goals one after another as you advance. If you can achieve it, then you can try to aim for a bigger performance. Success is found in consistency.

Did you take a long time to make a trading plan? Stick to it scrupulously! Just because you’ll hear about a new miracle indicator doesn’t mean you need to change your plan. 

Be careful, beginners will often make the mistake of taking a position without respecting the plans or strategies previously put in place because it is more exciting to be in the market than to follow its evolution. Be rigorous with yourself in respecting your trading plan, every day and over time.

Always manage your money efficiently

Some newbies are not shocked by putting 15 or 20% of the capital at risk on a trade. You should never risk more than 1 or 2% of your account on a transaction.

Don’t take positions of a fixed amount. Trade according to the market, not just according to whatever you feel like. You have to commit a sum of money in trading according to the market and your capital, not according to your desires.

Never spread yourself too thin

Diversification is a good thing when you are an investor. But a beginner in trading has an interest in following a single strategy at the beginning with a very limited investment universe: not to seek to trade at the same time in the stock market, in the currency market and in the commodity market. 

Don’t try to revolutionize the world of trading. Better to use a good old method that has proven itself over the last decades rather than looking for a new system that would save a lot more. The best jams are made in old pots.

Don’t get careless with Leverage

Leverage is indeed a double-edged sword. A lot of traders get tempted to take huge positions in greed for making a lot of money. But they often throw caution to the wind in the process. Remember that if you can earn $ 10,000 by taking a position in the market, you could just as quickly see them go up in smoke.

Our advice to become a good trader:

  • in order not to make a mistake, never exceed a leverage of 2 or 3 if you are an insider, limit yourself to a leverage of 5 if you are an ultra seasoned trader;
  • try to take a small position and double it if you are in the right trend.

Learn to cut and manage your losses

Before you can win, learn not to lose.

It is essential to always protect your capital with a so-called “ stop loss ” order. Use stop loss and protect your capital.

Our advice:

  • never take a position without a stop loss order, even if you are in front of your computer monitoring prices, even if you practice day trading;
  • place your stop loss before validating your order.

Always cut a losing position whenever possible. Time is literally money here, the sooner you cut your losses, the better your financial status.

Always stay calm

Just like a good hunter stalking its prey, it’s very important to be patient in day trading and wait for the opportune moment to strike with the correct trading strategy.

You shouldn’t let your emotions take hold and give in to the trader’s stress, but you shouldn’t ignore them either. Learn to manage emotions if you want to be a successful trader.

Trust your judgment. Many traders do not analyze the markets and have no opinion. They just read reports and analyses published by professionals. Is this the right way to learn to trade? No, obviously. And by following the advice of others, you will be vulnerable because you will not be able to spot their mistakes. Trust your reasoning.

Trade with disposable money

Whenever possible, you should trade with money that you don’t need to make a living. If you trade with the money that you need to live, you will not be able to properly manage your emotions. This is a one way road to financial disaster.

Spend a lot of time learning the craft

Trading, a profession in its own right, is like all professions in the world: you have to learn it first and foremost. It is not enough to open a trading account and read a few daily analyzes.

You have to be trained and informed using the many specialized books that exist but also trading training, an essential step for anyone wishing to trade on the stock markets or any other financial market and finally, practice in simulation to start.

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