Low Risk Day Trading Strategies

Day trading might seem like a dangerous venture to get involved in especially if you’re not the gambler type. If Your idea of a good time is not sitting perched around a black jack table with your mortgage payment riding on the flip of a card or spending endless hours at a slot machine hoping for a jackpot then you should be encouraged to enter low risk day trading.

However the fact is that most people will play the day trading game like people play games in the casino. Once they get a feeling in their gut about where to put their money they stick with it. If you know anything about casinos then you understand that, no matter what, the house always wins.

However, professional day traders don’t follow their gut on big money decisions. The key to not playing the stock market like a Vegas gambler is taking calculated risks, not on whims and fancies. Taking careful calculated risks is what separates the five percent of day traders that make money with the ninety five percent that lose everything.

Low Risk Day Trading

1) Clear Picture of The Market

Many different aspects of trading rely on you to be able to clearly see what is ACTUALLY happening in the market. For instance, a lot of new traders will get absolutely myopic when entering their trades. If you’re using five minute intervals to enter trades you might not see the big picture that will bring the big bucks. Try looking at the thirty and one hour intervals to get a better understanding of the market as a whole. It’s as if you are trying to survey a forest on the ground floor. If you climb to the top of a tree you can see the big picture and get the most information.

2) Try, Try Again

As much as there are traders who are too timid, never taking any risks and never getting any gains, there are also traders that are too ballsy. You have to make sure your not taking any risk that will prevent you from trying low risk day trading strategies tomorrow. The fact is that sometimes it is more courageous to listen to that little voice inside of you that says “I will try again tomorrow”. Don’t risk so much on a single trade that it prevents you from trying again another day. Professional traders will never find themselves risking more than two percent on a trade. Even more importantly, professional traders will always have a stop loss in place in order to safeguard themselves.

3) Trend Trading

There have been many traders who have made millions of dollars using this tactic. This is the ultimate get rich quick scheme that actually works. It requires you to follow the trends until they reverse. This sounds easy enough. Don’t let it fool you though many traders have been made and broken depending on their ability to identify and spot trends.

Source:
http://www.sec.gov/answers/daytrading.htm