Day trading is an exciting prospect for any person who’s researching ways to buy and sell stock. It’s even more appealing if you think it might be a way for you to quit your day job. But just like any approach to the stock market, there’s lots of risk involved with day trading. But also like other types of trading, there are ways to mitigate your risks and limit losses. Just remember to keep researching and practicing, and do your due diligence before trying out this technique.
If you’re going to try day trading, you need to develop a new strategy tailored to this unique approach. Even if you’re experienced and have a diverse portfolio, day trading is unlike traditional trading where the general goal is to hold on to your shares for as long as possible. With day trading, you want to make multiple purchases within a single day — even buying and selling the same shares before the market closes.
One of the best ways to limit your risk in day trading is to set stop-loss orders (also called limit orders). With these, you can place an order that will automatically go into effect when a stock hits a certain price. So, you can buy when a share is low and sell when it’s high. Plus, you won’t have to be constantly watching the markets to pinpoint when you’d like to make the trade. You can learn more about limit orders and other ways to limit day trading losses in the infographic below.