Day trading is the act of buying and selling a financial instrument (monetary contracts between parties. They can be created, traded, modified and settled. They can be cash, evidence of an ownership interest in an entity or a contractual right to receive or deliver in the form of currency; debt; equity; or derivatives) within the same day you purchased. You could even sell it multiple times over the course of one day. Taking advantage of small price moves can be a lucrative game—if you play your hand correctly. It can, however, be a dangerous game for newbies or for someone who doesn't adhere to a well-thought-out strategy.

Not all individuals or brokers are suited for high volume of trades that can be made by day traders. Some brokers are designed with the day trader mindset and excel in this regard. If you are looking to trade, and have no idea how it works, perhaps it is best to get in touch with a broker who could best accommodate those who would like to day trade and don’t know how.

There are also those online brokers who showcase their professional or advanced versions of their platforms that feature real-time streaming quotes, advanced charting tools and the ability to enter and modify complex orders in quick succession.

If however you are still keen to perform some day-trading of your own and think you have what it takes, then it’s key to remember the following:

Day trading is only profitable in the long run when traders take it seriously and do their research beforehand. Also, day trading is a job; not a hobby. You, therefore, need to treat it as such. Remember to be diligent, focused, objective and keep your emotions out of it. Business is business.

Below are some basic tips and tricks, as well as some industry know-how to become a successful day trader.

Knowledge Is power

Whilst knowledge of basic trade procedures is imperative, day traders also need to keep themselves updated with the latest stock market news and events that affect stocks - Interest rate plans, the economic outlook, etc.

Therefore, you need to do your homework. Try to make a wish list of stocks you'd like to trade and then keep yourself informed about the selected companies and markets in general. Try to keep abreast of business news and visit reliable financial websites often.

Set funds aside

Try to assess how much capital you’re willing to risk on each trade. Usually, successful traders will risk less than 1-2% of their accounts per trade. Therefore, if you have a £3,000 trading account and are willing to risk 0.5% of your capital on each trade, your maximum loss per trade is £15 (£3,000 x 0.5%). Set aside a surplus amount of funds in which you can trade with, and that you are prepared to lose. Remember, this is a gamble - this may or may not happen.

Set time aside

As mentioned previously, day trading requires your time. That's why it's called day trading. You’ll need to give it your everything – most of your day in fact. This is not something to consider if you have limited time to spare. The process takes much time and requires a trader to track the markets and spot decent opportunities, which can arise at any given time, during trading hours. Moving quickly is essential and key to making your efforts worth it.

Start small

As a beginner, you should only focus on a maximum of one or two stocks during a session. You will find it easier to track and find opportunities with only a few stocks to begin with.

Avoid penny stocks

Although you’re most likely to be looking for deals and low prices, its best to stay away from penny stocks (the stock of a small company that trades for less than $5 per share). These stocks cannot easily and readily be sold or exchanged for cash without a substantial loss in value, and the chances of hitting a jackpot are often ominous.

Time those trades

Many orders placed by investors and traders begin to execute as soon as the markets open in the morning, which contributes to price volatility. An experienced traders may be able to recognise these patterns and pick appropriately in order to make profits, but for someone new to the game, it may be better to just read the market without making any moves for at least the first 15 to 20 minutes. During the day, the market is less volatile and then movement on trading begins to pick up again toward the closing bell. Although the rush hours often offer great opportunities, it is safer for beginner to avoid these at first.

Cut your losses with limit orders

You need to decide what type of orders you are going to use t enter and exit the trades. The options are market orders and limit orders. When you place a market order, it's executed at the best price available at the time—thus, no price guarantee. On a limit order, you’re guaranteed the price, but not the execution. Limit orders help you to trade with more precision, wherein you set your own price (not unrealistic by more executable) for buying and selling. However, more experienced and seasoned day traders might use options strategies in order to hedge their position as well.

Try to be realistic about profits

You don’t necessarily need to win all the time in order to be profitable. Many traders only win 50-60% of their trades. They do however make more on their winners than they loose on their losses. You need to make sure the risk on each trade is limited to a specific percentage of the account and that entry and exit methods are clearly defined and written down for yourself. And then do not sway from this.

Stay calm and collected

There are going to be times when the stock markets test your nerves. As a day trader, you need to learn how to keep greed, hope, and fear at bay. Decisions should, at all times, be governed by logic and not emotion.

Stick to your plan

Successful traders have to move fast. You do not, however, need to think fast. This is because a developed trading strategy, done in advance, along with the discipline to stick to it, is key. It is vital that you follow your formula closely, and not sway from this. Try not to chase profits. Never allow your emotions to get the best of you and make you abandon your strategy.

Always remember, “Plan your trade and trade your plan” and you should be fine.