The basics of Day Trading by Coach Yoann

Day Trading 101: What Every Beginner Needs To Know

Trading in the stock market can be an exciting and potentially lucrative experience. Day trading is a popular strategy for many investors, allowing them to take advantage of short-term trends and potentially turn a profit. However, day trading is not for the faint of heart, and the uninitiated often overlook important steps that can help them succeed. If you're a beginner looking to get into day trading, there are a few key things you need to know to give yourself the best chance of success. Day Trading 101 is your guide to learning the basics of day trading, from understanding the fundamentals of the stock market to choosing the right trading strategies. With the right knowledge, a mentor and a LOT of practice, you can become a successful day trader and start making money in the stock market.


What is Day Trading?
Day trading is a form of trading that is typically done within a single day. Day traders make either a long-term or a short-term trading strategy, typically within a day or two. While there is no clear-cut rule for how long a day trader will hold a position (i.e. if it's even a day or two), it's important to note that day trading is much different than holding stocks long-term. While holding stocks long-term is often compared to investing in a savings account, day trading is better compared to 'gambling' (which does not really make sense if you ask me but that's another discussion). Day trading requires a lot of attention and focus (often in short bursts), whereas long-term investing does not really. Because day trading is such an intense experience, many people will do it for a few years and then transition to long-term investing.

Benefits of Day Trading
There are many potential benefits to day trading, the most important being the ability to make a significant amount of money in a relatively short period of time. Day trading is suited for those who are willing to take on significant risk in exchange for high potential returns. While day trading is typically a short-term strategy and not meant for long-term investors, there are situations in which day trading can still be profitable for longer periods of time.
Some other benefits of day trading include:
- Access to liquid markets with low barrier to entry
- Opportunity to make short-term predictions
- Opportunity to diversify your portfolio
- Less time commitment than long-term investing
- Ability to use margin to increase potential returns (although extremely risky)
- Ability to use short sales to protect against downside risk
- Ability to use options to reduce cost of trading

Understanding the Stock Market
The stock market is an open exchange where investors buy and sell shares of various companies. You can think of the stock market as a place where people buy and sell “shares” in companies. These shares represent a piece of the company, and investors hope that the companies will increase in value and the shares will increase in price. When you invest in the stock market, you’re buying a “share” in a company. The value of the stock is determined by how well that company does. If the company does well, it makes money, and the value of the company goes up, which makes the stock also go up (i.e. the shares are worth more). The company could also be bought out by another company, allowing investors who hold stock in the company to make more money from the deal.

Risk Management for Day Trading
Part of the challenge of day trading is limiting risk while maximizing return. Many day traders have lost significant amounts of money due to risks that they are either not aware of or do not adequately manage. Understanding risk can help you mitigate these issues, and it's important to build risk management into your trading strategy. When selecting stocks for your trading strategy, you also want to be aware of overall market risk, which may be different than the risks associated with individual stocks.
Some ways to manage risk while day trading include:
- Only commit a small portion of your trading capital to a single stock
- Make sure your risk is proportional to the potential reward
- Build risk management into your day trading strategy
- Follow your trading rules and plan

Technical Analysis for Day Trading
Technical analysis (TA) is the process of trying to identify trends in the market by looking at a variety of factors, such as the price of the stock and how many shares are being bought or sold. By studying these factors, many technical traders attempt to identify potential trends in the stock market, and then attempt to make trades based on these predictions. While there is no way to predict the future, technical analysis can be a useful tool for day traders. For example, if you see that a stock has been rising over a period of time, you might conclude that the stock is likely to continue rising (or not). This would be a classic example of a technical analysis sign known as a “buy signal”. On the other hand, if you see that a stock has been falling over a period of time, you might conclude that the stock is likely to continue falling (or not). This would be a classic example of a technical analysis sign known as a “sell signal”. The goal of technical analysis is to identify these buy/sell signals, and then make trades based on these predictions.

Choosing the Right Day Trading Strategy
As a day trader, you’ll need to spend a significant amount of time researching stocks and different trading strategies. You’ll also need to spend time learning how to execute your strategies and how to determine when to close a position. Using a Simulator with ' simulated paper money' can be a great idea to start testing your strategy. Depending on the strategy you choose, you may also need to spend time learning how to use options or short sales. Before deciding on a trading strategy, you’ll want to consider your trading goals, risk tolerance, and amount of capital you’re willing to invest. Day trading can be particularly challenging for beginners, as the market is open for a relatively short period of time and you don’t have any long-term data to evaluate your strategy against. One strategy that can be helpful in this situation is to “scalp” small profits from a variety of stocks or other assets. This strategy involves making small but frequent trades with the goal of making a small amount of profit from each trade. This can help you get in the habit of making trades, while also allowing you to gain some experience with the markets. Keep in mind that there are countless of strategies out there and it is up to you to make your own or find the one that fits your personality.

Setting Up a Day Trading Account
When you decide to start day trading, you’ll need to open a brokerage account. There are many different types of brokerage accounts available, so it’s important to do your research to find the account that best suits your needs.
Before deciding which account to open, you’ll want to think about things like:
- What types of assets you plan on trading
- What types of order types you plan on using
- How much you’re willing to pay in trading fees
- How easy the account is to use
- How user-friendly the website is
- How safe and secure the account is
- The types of educational materials the brokerage offers
- The customer service experience you’ve heard from others..

Making Your First Trade
It can be exciting to make your first trade, but it’s important to remember that trading stocks is not like buying a pair of shoes. Once you make a trade, you can’t take it back. Once you click the “sell” or “buy” button, that transaction is final. Before you make your first trade, make sure you’re prepared for what could happen. Having an understanding of how trading works and what could potentially happen with your trade can make a huge difference in how you react when you make your first trade. Also, make sure you have a trading plan in place. This plan can be as simple as deciding which stocks or other assets you want to buy or sell and when you want to make the trade. Having a plan in place can help ensure you’re making logical decisions when you make your first trade.

Learning from Your Mistakes
One of the best ways to learn is to 'simulate' without real money first and make mistakes. However, it’s important to make the right mistakes so that you can improve as a trader. When you make mistakes, you are able to learn from them and make adjustments accordingly. This can help you better understand your trading strategy and make informed decisions in the future. When you make mistakes, make sure you write them down so you can use them as a learning tool in the future.
Here are some common mistakes new traders make and how to avoid them:
- Mistakes related to using trading tools
- Mistakes related to choosing trading strategies
- Mistakes related to trading psychology
- Mistakes related to risk management
- Mistakes related to execution and order types

Finding Day Trading Resources
Keep an eye on the tab 'Free Education' from CoachYoann.com website where I post all type of articles about Trading, Mindset and Fitness for traders.
You can also book a 1:1 session with me by clicking here:

https://calendly.com/coachyoann/free-consultation

Lastly, I also post a ton of free content on my youtube channel https://www.youtube.com/@CoachYoann where you can watch the recap of most trades I take per day.

Thank you for reading.

Coach Yoann
https://www.coachyoann.com

Disclaimer: This article is for informational and educational purposes only, not financial advice. This article does not constitute an offer or a solicitation or a recommendation to buy or sell any securities, financial product or services by nShape Capital (''Coach Yoann''). Furthermore, nothing in this article is intended to provide tax, legal, or investment advice. All readers should do their Due Diligence before making any financial decision. Click here for full disclaimer: https://www.coachyoann.com/disclaimers