Did you know that only around 20% of day traders end up being successful?
Research shows that around 40% of all new traders give up after a single month and the remaining 40% call it quits before the two-year mark. This shows the level of difficulty there is within the industry and how rare making a career out of day trading is.
This is why it’s so important to equip yourself with the latest tools to help you make the most of every possible trade. Trading tools range from analytical software to charts like NinjaTrader indicators. These all aim at making the life of a trader that much more efficient and profitable.
Interested in learning more about how to be an active trader? Here’s everything you need to know about customer indicators and how they can help with day-to-day trades.
What Is Day Trading?
Day trading refers to the act of buying and selling stocks, shares, or securities within a single day. In simple terms, this is when someone buys and sells a particular asset in a short amount of time hoping to capture returns within a single day of trading.
This kind of trading is incredibly risky and requires large amounts of money to be invested in order to see a significant return. This is because stocks don’t tend to move much day-to-day. In most cases, a traditional stock can go up or down around 1% to 2% in a day.
For a day trader to make a significant profit, they would need to have a significant position so that the 1% gain is worth it. To put it in context, if a day trader wanted to make a $100 profit in a day, they would need to invest $10,000 into a particular stock and hope for a 1% increase in the stock’s price that day.
Since there is significant risk involved, day traders make use of a dynamic set of tools to help them accurately navigate the market. These tools come in all shapes and sizes and use company and market data to predict how the market is going to react that day.
What Are Indicators?
One of the most useful tools day traders can use is indicators. These tools dive deep into historical data to analyze patterns and predict price movements in the future. Technical indicators are mathematical calculations that are based on actual data from either the company itself or other companies within the market.
Indicators are the result of technical analysis. However, the results are graphically displayed to make it easy for traders to analyze. These results are charted to show how the data predicts the stock or asset price to move over time.
These indicators are most useful when layered over the real-time price chart. This way you can easily see how the stock is expected to react as time goes by. There are many different companies doing this analysis and creating indicators for traders to use. By far the most popular are the indicators from NinjaTrader.
What Are NinjaTrader Indicators?
NinjaTrader offers over 100 different technical indicators. This means that you’re bound to find a trading indicator that works for you regardless of your trading style or goals. NinjaTrader supports more than half a million traders around the world, making it one of the most trusted indicators available today.
NinjaTrader also offers an immersive trading simulator to help you learn the basics of trading in a simulated environment. This means that you can effectively learn how to trade without putting any of your own money at risk. This is incredibly important for new traders, as losing money while learning is often what causes them to leave the industry as a whole.
Tips To Master Day Trading
Day trading can be a tough business. However, you can make a fortune if you know what you’re doing and invest in the right tools to help you trade. Interested in learning a few tips to day trade like a boss? Here are a few to keep in mind.
1. Start Small
As mentioned before, day trading comes with its fair share of risk. This is why it’s beneficial to start small and grow your portfolio as you become more comfortable and confident in the industry. A great rule of thumb that many new investors work by is to never invest anything you’re not willing to lose.
This is because anything can happen, with the worst possible result being that your entire position goes to zero. While you can set automatic sell orders to help minimize your losses, it’s advisable to always start small and grow as you get familiar with everything. This can also prevent you from making any mistakes that could have otherwise been avoided.
2. Avoid Penny Stocks
Penny stocks can look incredibly attractive as they are so cheap compared to other investments. Even if they are attached to impressive businesses, penny stocks offer volatility that can crush your portfolio in the blink of an eye. This is because it only takes one shareholder to sell their shares for the price to go plummeting to the ground.
Penny stocks are priced incredibly low. This means that even if the share moves by 1 cent, it can have a massive impact on your returns. If the penny stock is worth 10 cent, every 1 cent move is actually a 10% move. This means that if the stock goes down by just 2 cents, it can tank your portfolio by 20% in a matter of seconds.
3. Stick to a Plan
When investing in the market, it’s always good to have a plan. This means that before you buy into any security, you should have a good idea of where it’s going to go and when to cash out. This plan does not have to be incredibly specific, but it’ll help you develop a strategy and discipline to execute strategies successfully.
These plans should also include what to do if the security does not do as well as you expected. Depending on the trading platform that you use, you can set limit orders to help cut your losses. This means that if the security or asset that you invested in drops below a certain price, your position will automatically get sold so that you don’t lose too much on that specific trade.
When executing your plan, it’s important to stay cool and stick to the script. This is why developing the plan beforehand is so beneficial as it can prevent you from making rash decisions in the spur of the moment.
4. Invest in Tools
Investment tools are some of the best ways to get expert guidance for a fraction of the cost. These tools range from deep analytical tools to interactive charts that can show you accurate predictions of where the stock or security is going to go. While these tools are not 100% guaranteed, they are based on real data that is far more accurate than individual analytics.
While some tools are free, others you’ll need to buy. However, these tools can help you make incredible returns in a more educated and controlled way, easily justifying the investment in the first place.
5. Know When to Exit
The basics of trading consist of forming a plan, buying a security, and waiting for the right time to sell. While many people agree that finding and buying the security is important, knowing when to sell is equally vital to a successful investment plan.
This is because stocks and securities are always fluctuating in price and can go down as easily as they go up. With day trading, you want to capitalize whenever stocks go up, but you don’t want to wait too long and miss out on cashing in a decent profit.
This also works in the opposite direction, as cutting your losses early can often save you from further losses.
Start Using NinjaTrader Indicators Today!
NinjaTrader is one of the most popular names in the world of trading indicators. With a wide range of indicators available, NinjaTrader indicators can help you improve your skills whether you’re a professional trader or just starting out.
If you have any questions or want to learn more about the world of trading, feel free to look through our website for more interesting articles. Thinking about getting started? Click here to browse our full line of NinjaTrader software to help you trade like a pro.