Day trading is the idea of buying and selling assets multiple times in a day. This process can also be executed once a day. Are you a trader in Hong Kong? If yes, you need to understand that leveraging small market fluctuations can be a productive idea when executed properly.
Still, it can be risky especially for beginners and traders who lack a robust trading strategy. It’s worth noting that not all brokers can manage a high magnitude of trades executed by day traders.
Day Trading Brokers
Some brokers in HK are ideal for day forex trading and you can always research extensively before choosing your ideal broker. Today, brokers have adopted advanced and professional platforms that come complete with advanced charting tools and real-time quotes.
These also allow traders to enter and adjust intricate orders many times. Here are some common day trading principles that traders in Hong Kong can adopt to reduce losses.
Knowledge is Critical
Apart from understanding basic trading procedures, HK day traders should monitor any events that can have an impact on stocks. You can source this information from various online platforms.
Identify stocks you would want to trade in and gather as much information about the same as possible. Educate yourself about general markets as well and scan through dependable financial websites and business news for the latest stock market news.
Reserve Funds and Time
Evaluate the amount of capital you are comfortable risking per trade. Remember, many successful day traders in Hong Kong risk between 1% and 2% of their account for each trade. For instance, if your trading account has $40,000 and you’re comfortable risking 0.5% of your capital per trade, your highest loss for each trade will be $200.
Reserve some funds which you can trade with and are ready to lose. Day trading is demanding and you need to invest your time. Choose day trading only if you have sufficient time during the day. Traders will need to monitor the markets and identify opportunities that can come up unexpectedly within the trading period.
Some traders in Hong Kong venture in the market expecting to make colossal amounts of money within a short time. When this doesn’t happen, some traders will get frustrated and give up. As a beginner, experts recommend starting small. For instance, you can stick to purchasing between one and two stocks per session.
Monitoring and identifying favorable circumstances is easy with a few stocks. Today, traders can easily trade partial shares which allow them to determine smaller and specific dollar amounts they are interested in investing in. For instance, if your preferred shares are trading at $300 you are only interested in purchasing $60 worth; many HK brokers will allow you to do so.
Avoid Penny Stocks
Many HK beginners will be eager to establish low prices and deals. However, you should always stay away from Penny stocks. Succeeding with these stocks can be an arduous task. It’s worth mentioning that many stocks trading below $5 per share are often delisted from a popular stock exchange.
Penny stocks are only exchangeable over the counter and unless you have researched extensively and identify a viable opportunity, you want to avoid these as much as possible.
Time the Trades
When investors and traders place their orders, the execution takes place in the morning when the markets open. This is a major factor that can trigger fluctuation. Expert HK traders will recognize patterns with ease and make informed decisions to increase their chances of making profits.
However, beginners may want to study the market before making any moves for the first 10 to 20 minutes. The middle hours are less unstable and fluctuation will start again towards the closing buzzer. The rush hours come with numerous opportunities, however, beginners in Hong Kong will benefit more from avoiding them at first.
Professional traders in HK can easily navigate through the psychological and emotional biases that many beginners struggle with. Whether you are a seasoned trader or a beginner however, you exercise caution to protect yourself from incurring massive losses.