Day trading is an alluring change of profession for many who are feeling beaten down by the daily nine to five routine. Everyone has seen the commercials expressing that we can be like those guys sitting on a jet if only we would spend a little cash upfront on their course. Day trading requires patience, but buying into some trader’s fancy program isn’t necessary to see returns on your investment. Some simple research, and a dedication of your time is all you need to begin trading at a higher volume, and most importantly, to begin seeing the returns you are hungry for.
A common misconception in this practice is that people can calculate the exact return they might see based on others’ experiences, or from extrapolation of one’s long term investments’ returns. In truth, every day trader is different, and each trader can establish a benchmark return – if they develop rock-solid fundamentals. The only thing that day traders share is a common set of rules: $25,000 minimum capital investment and the same standard trading hours and common market conditions that prevail among traders of all stripes.
The hard truth is that most day traders fail, but not for the reason you might think. The most common cause of collapse is overextension and faith in poor investment decisions. Essentially, a lack of adherence to the fundamentals sinks most investors. There is considerable risk inherent to day trading that does not cross over into other long term investments, but this strategy can also net exponential profits that are just not accessible to the index fund investor. The promise of increased returns leads investors to leverage more of their capital than they should, panic and sell at a loss, or become excited about the prospect of a small uptick in the market and sell too quickly rather than waiting for the stock to mature to its full, short-term potential. Maintaining good discipline in your trading habits is the only way to see consistent returns; living by the seat of your pants waiting for a huge uptrend may become the outlier, but so too will crushing losses.
A great place to start your day trading journey is in the oil market. A robust crude oil strategy will help kick start your day trading fundamentals, and the lessons learned here can be leveraged into other commodities and stocks with some very simple tweaks. When dealing with the oil market, it is important to begin with a baseline knowledge of how the price structure works. Oil prices are intertwined with geopolitical action: An embargo landing or lifting in the Middle East or South America, diplomatic tensions with OPEC nations, or inclement weather in the Gulf of Mexico or Oman, or the Pacific Northwest can hike up oil prices. This volatility is not beneficial to your gas tank, but it is to the wallet of a day trader. Sweeping price fluctuation is where you are best able to flourish, netting the greatest profits.
Another feature of the oil market that plays to your advantage is the inverse relationship that the US Dollar and oil enjoy. Historically, when the Dollar has been at its strongest, oil prices see dramatic dips in price. Following the Dollar’s daily journey as it relates to the Euro, Yen, or Pound is a great metric for gauging the trending movement of the oil commodity. Doing your homework on both the diplomacy of the world stage and its financial outlook will help you succeed in this space, however, it takes a committed dedication to personal growth in order to see the fruits of your success in full bloom. For more information on oil trading strategies, visit: https://tradingstrategyguides.com/crude-oil-trading-tips/
Day trading is a difficult proposition, but those with a strong will to succeed and a commitment to the research required to take full advantage of the learning opportunities that early adventures in day trading presents will find success in the markets for years to come.