Step 14: Beating the market
TIP: Quit your job. That's right, quit your job. Beating the market is not something you can do part-time. You have to become a stock market expert and follow developments as they happen. This will become your full-time job.
TIP: Buy monitors. At least three. You will require a news feed, stock exchange feed and a high speed connection your brokerage firm for purchasing and selling stocks.
TIP: Sit at the computer all day and read, read, read. Remember, the stock markets fluctuate on herd mentality. So when the investors at the exchanges see a trend (up or down), they tend to "ride the trend". As a daytrader, that's what you have to do as well. When you notice that prices are starting to rise on an issue you're following, or fall on an issue you own, follow the trend.
TIP: One of the biggest helps for daytrading is knowing when to get out of a losing position. Set a "stop loss" level for your investments. That means that you instruct the brokerage firm to sell automatically if the share price drops to a certain level. For example, if you purchase shares at $23.55, you may want to put a stop-loss at $23.45.
TIP: Another is to set a gains target. It's easy to get greedy so before buying a stock, decide what return on investment you're looking for and lock that return in by selling as soon as that price is reached.
TIP: Learn to read charts. Charts are much better than ratios at giving you an idea of what the next trend MAY BE. Look at the chart below (pic 2). This is a chart from stockcharts.com. It shows the daily price for Bell Canada Enterprises (BCE) with a 15-day and a 50-day moving average. The intersections of the moving averages are your buy and sell indicators. As you can see, even this tactic leads to some uncertainty. This is not an exact science, folks. You CAN lose your shirt, your house, your car, your dog...