While major banks provide trading accounts, they are not always the ideal option for day traders. Fees at major banks are often higher, while smaller brokers typically provide more adjustable charge and commission structures to day traders.
When Should You Day Trade?
Whether you’re a newbie or a seasoned veteran, your existence revolves around consistency as a day trader. Trading at the same times every day is one approach to ensure consistency.
While some day traders trade for the entire regular session (for example, the U.S. stock market from 9:30 a.m. to 4:00 p.m. EST), the majority trade for a portion of the day. Day traders frequently trade for two to three hours every day. Here are the hours you should prioritize:
The optimum times to trade stocks during the day are the first to two hours after the opening and the last hour before the closing. It would help if you practiced trading between 9:30 a.m. and 11:30 a.m. EST because this is the most volatile period of the day, with the highest price movements and the most profit potential. Large moves are also made during the last hour of the day, from 3 p.m. to 4 p.m. If you only have an hour or two to trade, trade in the morning session.
Day trading futures at the open is a wonderful time to do it. Because there is some trading activity in active futures around the clock, lovely day trading chances often begin a little sooner than in the stock market. Concentrate on trading between 8:30 and 11:00 a.m. EST. Futures markets have varied official close timings, but the last hour of trading generally offers significant changes to capitalize on.
During the week, the currency market is open 24 hours a day. As a result, EUR/USD is the most commonly traded day trading pair. When the London markets open between 1 a.m. and noon EST, this currency pair often sees higher trading volumes. Because both the London and New York markets are open, 7 a.m. to 10 a.m. EST hours often yield the largest price movements.
You don’t have to trade all day as a day trader. However, trading for two to three hours a day will most likely result in greater consistency.
Control Your Day Trading Risks
Before you proceed any further, you must understand risk management. Risk should be managed in two ways for day traders: trade risk and daily risk.
Trade Danger
The amount of risk you are willing to take on each deal is referred to as trade risk. Each trade should ideally include risk of 1% or less of your capital. This is performed by selecting an entry point and then establishing a stop loss, which will exit the transaction if it begins to move too far against you.
