One of the very few luxuries the market offers is ‘time’. If you buy a stock today and it goes down tomorrow, you can still give it ‘time’ with a hope that it will bounce back. However, when you day trade, the luxury of time is taken away. Each day, the scores are settled. This makes day trading a very tough profession, with a need to be highly consistent and disciplined. Needless to say, if done right, it can be highly rewarding. If you are getting started on day trading, there are a few aspects that you need to bear in mind.

Set realistic expectations: Many traders live with a notion that they can double their money every month. Even if they manage to do this, they should attribute a large portion of the success to luck. The key to successful day trading is being consistent. Tone down your expectations. If you are generating 3-4 per cent return a month, you are doing a phenomenal job.

Stop speculating, start trading: Trading requires you to design a strategy. Every design has a valid reason behind it. If you cannot find that, then you are blindly speculating, which is a sure recipe for disaster. Typically, the valid reason should be a ‘trade signal’ from a trading strategy. The strategy can be as simple as a price volume breakout, moving average cross over or as complex as neural network algorithm.

Back test: Once you develop a hypothesis to trade, back test it on historical data to understand how well the hypothesis stands against the historical market data. Make sure the data you choose covers different market cycles. This will help you understand how well the hypothesis stands against the test of time. Once you are satisfied with the back-testing results, take your strategy live and start scouting for opportunities.

Keep costs low: Some costs such as STT, stamp duty and service tax are beyond your control and there is nothing much you can do about it. However, make sure brokerage, transaction charges, and other service charges are low. Remember, if the costs are low, your odds of winning will be higher.

Equip yourself: Day trading requires you to have a reliable broadband connection. Have access to the software which helps you visualise price charts, analyse price volume action, back test and deploy strategy in the live markets. Make sure that the price charts help you view both live and historical charts. It is preferable to have a single software that also lets you trade directly and place orders in the market.

Capital allocation: Don’t allocate all your capital to day trading. Split it wisely. A good way to split would be 60 per cent towards long-term investing; 30 per cent to day trade, and 10 per cent in cash.

Keep learning: Make sure you have sound knowledge on market-related topics. In fact, you will evolve into a thorough market professional only by learning all the key aspects of the market.

There is plenty of high quality, practical content available online for free; make complete use of it. Don’t make the mistake of paying the so-called ‘market expert’ a huge fee with a hope that he will teach you all the practical aspects of trading.

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