Day Trading With Financial Freedom in Mind

Being stuck in a dead end cubicle job can be pretty depressing. You are tasked with all the unpleasant things that your boss does not want to do, you are expected take initiative, but you never have the authority to get anyone to do anything and are working on boring spreadsheets all day with marketing plans and lifeless content ideas for upper stakeholders. It is a recipe for disaster.

Or it could be a path towards financial freedom, if you can channel all that energy and disappointment into a more lucrative pursuit like day trading. Placing a limit order and learning to manage your risk can sound very boring, but not if you are trading thousands of dollars with the potential to make big profits. The way to get more excited about your job is to make plenty of money and you be able to handle the pressure.

Risk management is an essential part of day trading. There is no substitute for being able to keep your risk profile stable and your profits rising. The ideal ratio is 2:1 for profit to loss in a given week or a given month. There is no doubt that you are going to make some bad trades, but the key is to make sure you limit your losses. In a way that makes sure that you are profitable if you hit the nose on 60% of your trades.

Limiting your losses is an art that takes a few years to learn. You can start by learning everything you can about limit orders and stop-loss orders. To be able to keep everything straight when you are making multiple trades per day, you need to be able to use a stop-loss in order to limit how low your trade can go. You need to have a plan for how you expect each and every trade to go. When you put a stop-loss order on a trade, once it drops to a certain point, you can keep your losses to a minimum.

A limit order is different from a market order. A market order executes as soon as you put it in, no matter what the price is on the stock. When you set a buy limit order, the trade will only execute if the price is hit in the market or a lower price is hit. With a sell limit order the process is the opposite. You set the price that you would sell your stock at and that price or higher has to be hit in the market for your trade to be executed.

When you are setting a limit order, you need to specify whether it is for buying or selling, the number of shares, the security, the order type and the price. Those five components make up the limit order, But you need to keep in mind that the limit order is only a tool. This is not set it and forget it territory. You still need to be paying attention to how the stock is performing and understand all the avenues you have to make a profit. That is the best way to use a limit order to your advantage.

Leave a Reply