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The Complete Guide to Stock Day Trading and the Best Strategies for Successful Investing

Updated: 5 Jan 2022

Many stock market investors and traders in Malaysia consider diversifying the risk of their stock portfolios but are unsure how to do so. In this article, we will walk you through the complete day trading guide as well as the best day trading strategies you can use for successful investing.

What is Day Trading and How Can You Get Started?

Short-term trading, also known as day trading strategy or day trading, is the purchase and sale of stocks in less than 24 hours. These day traders typically trade on a daily basis. They might trade twice, or even dozens of times, in a single day.

Day trading gives the trader more control over the trades they open because they are not subject to overnight charges. Day traders typically keep a close eye on market movements. They will act quickly if something is profitable or potentially profitable according to the system they install. This is because they will be able to concentrate on a higher winning percentage in their trades.

Your trading environment must be supported by robust tools if you want to do day trading successfully. Among the fundamental requirements are:

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  • Durable Computer
  • Large Monitor
  • Fast internet connection

How Does Day Trading Work?

Day Traders trade the market five days a week (with the exception of cryptocurrency, which is traded 24 hours a day, seven days a week). The opening hours of the Stock Exchange are given special attention because the majority of traders are present and the trading volume is very high. Day trading can be considered a regular job, but it does not provide a steady income if done as a hobby. One keeps regular working hours and trades on a daily basis. Professional day traders in banks or institutions are paid a fixed salary plus bonuses for making a profit through trading.

Some traders prefer to trade for a few seconds and others for a few hours. Day trading is tailored to the trader's preferences. Traders are always subject to market conditions. You cannot make a successful trade if there is no movement. The market's high volatility (movement) is a force trader's friend.

Stock Day Trading Strategies for Successful Investment

stocks for day trading

1.  Equip Yourself with Enough Information

Daily trading is typically performed by traders who have prior experience and a thorough understanding of the market's fundamentals. Many people advise new traders not to do it. However, if you are interested, it is advisable to arm yourself with a variety of fundamental knowledge.

These fundamentals include procedures, trading tools, in-depth knowledge of the products to be traded, and market conditions. Find out what factors can affect the price as well.

  1. Profit from Long-Term Trends

Checking long-term trends is one method that many day traders employ. The long term trend is usually in the 1 to 4 hour time frame. They enter the market to open a position after determining the direction of the trend. The most common time frame is 10 to 15 minutes. The strategy of detecting this trend is also referred to as trend trading.

3.  Utilise Counter Trend Trading

Keep in mind that not all day traders base their daily trading decisions on long-term trends. Some traders prefer to open positions in the opposite direction. This is done so that they can enter the market earlier if the trend changes. This strategy, like the long term trend, can make use of a time frame with a duration of 10 to 15 minutes.

4.  Take Note of the Margin

Margin trading is the practice of trading assets using funds obtained from securities firms as third parties. When using margin trading, you are trading using money that does not belong to you. That is, there are some risks you must be willing to accept.

Margin trading is not recommended for beginners, despite the fact that it can aid in the trading process. The reason for this is that there is a chance that you will mishandle the situation, resulting in massive losses.

5.  Specify Exit and Entry Times

The correct entry and exit times determine your level of day trading success. As a result, carefully consider when to enter and when to exit, as well as the price level at which you will exit. You can avoid trading blunders this way. If you notice market conditions that are less favourable, it is a good idea to exit as soon as possible to minimise losses.

6.  Limit the Capital You Use

For starters, when it comes to day trading, you should not go all in. Begin your trading with low-value stocks or foreign currencies. You can choose a maximum of two stocks for your portfolio. You can learn to track and look for profit opportunities more easily with a small investment. Using a large number of stocks or foreign currencies when you do not understand market conditions makes it difficult to exit at the appropriate time.

How to Choose Stocks to Day Trade

day-trading

  • Liquidity

This is most likely the most important characteristic of the best stocks for intraday trading. Liquid stocks are traded in large quantities, allowing for larger purchases and sales without affecting the price. And, because intraday trading strategies frequently rely on speed and precise timing, you never want to be left without a market for your stock at the end of the day.

  • Moderate Volatility

Most traders avoid highly volatile stocks, which are those whose prices fluctuate violently and/or in unpredictable ways, with prices fluctuating more than 5% on a typical day. Instead, they stick to equities that move at a more moderate pace – you want the stew to boil, but not boil – and, in fact, make their money from small price changes rather than large ones. Stocks that are highly volatile tend to be somewhat liquid as well.

  • Group Followers

While some traders specialise in contrarian drama, the majority of traders seek equities that move in relation to their sector and index group. This means that when an index or sector rises, so does the price of an individual stock. These equities are more reliable and predictable in their movements because they follow the expected path in their industry or category, making it easier for you to move yours.

Stocks Volume Market Cap (MYR)
ATAIMS

ATA IMS BERHAD

60.995M 854.033M
SMTRACK

SMTRACK BERHAD

36.799M 76.166M
DNEX

DAGANG NEXCHANGE BERHAD

33.345M 2.366B
AT

AT SYSTEMATIZATION BHD

16.516M 184.909M
BINTAI

BINTAI KINDEN CORPORATION BHD

16.359M 130.424M

Best Stocks for Day Trading in Malaysia

  • Etsy Inc.

Etsy Inc.'s stock price increased by more than 250 percent in 2020 alone. This indicates that the stock's price movements are volatile, with more profitable swing trading opportunities.

  • NIO

Another best stock for day trading in Malaysia is NIO. A Chinese multinational vehicle manufacturer, the company has reported a 127 percent increase in revenue from the second quarter of 2020 to US $1,308.4 million.

  • Tesla Inc.

Last but not least, Tesla Inc. is another popular choice for day traders because of the organisation’s major proponent of environmental conservation.

With recent earning increased by nearly 40% to around $ 9 billion, the stock is currently trading at around $753 per share, and may be one of the most fitting stock for a day trader to profit with.

Best Brokers for Day Trading in Malaysia

With hundreds of active providers in the online space, choosing the right online trading platform for your day trading needs is not an easy task. For example, a platform should not only have an excellent reputation and support the financial markets of your choice – but should also offer competitive payments and the best customer support. To help you in the right direction, below you will choose the best brokers for Day Trading in Malaysia.

1. eToro

eToro is widely known as the best trading platform to consider for your trading journey. This broker is ideal especially when you are one of the new traders or investors with an interactive platform and easy interface. In addition, eToro supports several asset classes which includes 2,400 shares in 17 different markets.

2. Capital.com

Capital.com offers users the facility to trade more than 3,000 financial instruments covering stocks, currencies, indices and commodities, with the total assets traded by their clients in 2019 worth more than $ 85 billion. Capital.com will also offer secure facilities as they are authorized and regulated by the UK Financial Conduct Board (FCA) and the Cyprus Securities and Exchange Commission (CySEC).

3. Libertex

Libertex is a popular CFD trading platform among UK traders who prefer low fees and commissions. On the front of this is a zero spread platform offer. This means that regardless of which asset you specify to trade, there is no gap between the buy and sell prices. As such, this allows you to profit from industry -leading quotes. Also, although Libertex charges a commission for each trade, this is often very low. In fact, the commission is often below 0.1% for each order. For example, the popular forex pair NZD/USD can be traded with a commission of only 0.012%. In terms of supported markets, Libertex offers CFDs on stocks, commodities, and currencies

Day Trading Tools or Softwares to Use

Among the popular software among day traders in Malaysia are

  1. Share Investor / Bursa Station
  2. Nexus Chart
  3. Trading View
  4. Homily chart
  5. Fiavest

Share investor/Bursa Station

Excellent software, but it necessitates a high level of skill to fully utilise it. To reap the full benefits, you must be technically savvy as well as skilled at trading. When purchasing software for the first time, make sure to get a guide or training package so that it is worth using with the software's capabilities.

Nexus Chart

Excellent free level charting. There are numerous indicators (if you trade using indicators). The majority of brokers have subscribed to the Nexus Alerts Chart. The alert will be triggered based on a predetermined algorithm. There are several packages and modules available if you want to subscribe directly from the Nexus Chart. The free version of the Nexus Chart, however, does not include any real-time data.

Trading View

Trading View is one of the most popular charting software because it provides basic accounts for free to investors. This software is suitable for inexperienced traders and investors, as it provides a good screener, is user-friendly, and is equipped with a variety of indicators (including custom user created indicators at public indicator library). Paid packages include extras like real-time data subscriptions, live alerts, and access to more gun indicators on your chart.

Homily Chart

Known as a little more expensive charting software, although a free version is available on mobile phones. According to public feedback, the Homily Chart is well-known for its MCDX (Multi Color Dragon X) indicators.

Fiavest

Fiavest is an excellent software for intraday traders. Smart money transactions are tracked using this method (whales, sharks, syndicates, institutions, whatever the name people want to call him). There are two versions available: Pro and Lite. The lite version is a low-cost, functional mash. Only those with a M+ account are eligible to subscribe.

Risks of Day Trading

If you trade incorrectly, day trading can be quite dangerous. Despite the fact that the requirement to make additional contributions to CFD trading has been removed, there is still the possibility of losing 100 of your Deposit capital. As a result, select a reasonable position size. Many beginners, in particular, take too big a risk because you overregat the account.

You should definitely use an automatic loss limit to protect your position (stop loss). This tool closes a position at a predetermined price or loss. The trader can always limit risk. In the end, the trader is the one who determines the risk. It is entirely up to him how much money he wishes to invest in the market.

The basic rule is that the greater the risk, the greater the potential profit. Create a trading strategy and set goals on a regular basis. In this regard, good risk management can be extremely beneficial. Professional investors put 1-2 percent of their total capital at risk in each position. Every day, high profits are possible with a good profit ratio.

Why Day Trade Stocks?

stock day trading

Why should you begin day trading?

As with any other trading style, there are advantages and disadvantages. In general, many traders are enthralled by the prospect of exchanging their own work for stock exchange trading. Simply spend your working hours in front of a computer to earn enticing money.

Profits are also realised quickly, which is an advantage. While longer-term investments may yield a few percent per month, a day trader earns his daily percentage. He also saves on swap costs (financing costs, interest) for leveraged derivatives, which accrue overnight. However, because of the high frequency of day trading trades, trading fees are generally higher.

Pros Cons
Quick gains possible Higher trading volume means higher trading fees as well
No overnight trading fees (swaps, interest payments) You will need very fast reactions and high brain capacity
It is not always necessary to sit for many hours in front of a computer because the goal can be achieved quickly Trade with very fast algorithms and professional traders

Conclusion: Start Making Money by Day Trading Stocks Today

make money with day trading

Day trading is a legitimate way to enter the market professionally. However, one should not approach this subject lightly. It can take several years for a trade to become profitable. We can assure you that it will not work unless you put forth your own effort.

You may still have the best method for the market in front of you, but you must practise on a regular basis and understand how the market behaves at various points. You can make money even with the most basic items on the market. However, trading requires more than just the right strategy.

As a day trader, it is critical that you understand and practise the proper day trading strategies in order to have a successful trading journey. A successful day trader makes certain that they do not lose money recklessly, even if they are trading in small amounts, as this can be costly if it occurs frequently. We hope this article's guide helps you better understand the stock market and, as a result, helps you become a successful day trader.

FAQS:

Day trading is a highly risky activity, with the vast majority of day traders losing money—but it is potentially lucrative for those who achieve success.

The minimum deposit needed to day trade in Malaysia differs between brokers, sometimes as low as RM100. Most platforms will charge commissions so be sure to consider all additional fees before selecting your broker.

While day trading is neither illegal nor is it unethical, it can be highly risky. Most individual investors do not have the wealth, the time, or the temperament to make money and to sustain the devastating losses that day trading can bring.

Day traders usually receive profit typically ranges from RM2,000 to RM4,000 a month, depending on their performance, as well as a share of the profits realised.

Among the best stocks to day trade are Bakkt Holdings (BKKT), Marathon Digital Holdings (MARA), Riot Blockchain (RIOT) and AMC Entertainment Holdings (AMC).

One way for day traders to choose stocks for day trading is to find those that have ample liquidity, mid to high volatility, and group followers.

The first thing to note is yes, making a living on day trading is a perfectly viable career, but it’s not necessarily easier or less work than a regular daytime job.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage . 68 % of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money .