Novice day traders are often exposed to exaggerated or inaccurate claims by firms and organizations seeking to profit from the sale of products and services relating to day trading. It is wise to treat many such claims with a healthy dose of skepticism, and to apply common sense in this regard. Here are some things to watch out for:

Claims such as "Trade with No Risk!", "Proven System!", "Guaranteed Six Figure Income Trading at Home!", and similar claims should set off loud alarm bells. Day trading always involves risk, there are no proven systems that always work, and profits are by no means guaranteed.

When reviewing a day trading system that someone is offering to sell you, keep in mind that the past performance of any system is no guarantee that you will be able to achieve the same results. A well-known characteristic of stock markets is that conditions and prices may change dramatically over time. A day trading system that is touted by the vendor as having a great performance record during a period when markets have been rising may perform poorly in a bear market.

Beware of vendors of day trading software, books and videos who provide glowing testimonial from third parties. These testimonials may be true or they may be false. You will have no way of knowing whether or not such testimonials are indeed genuine, and it is therefore best not to rely on them.

Before dealing with any broker that caters specially to day traders, make sure that you perform some due diligence on the firm. In this regard, it is a good idea to contact your state securities regulator to determine whether the company has any outstanding claims filed against it or has ever been subject to any disciplinary action in the past.

Be very wary of any "hot tips" and "hot inside scoops or information" that you may encounter on Internet bulletin boards, chat rooms and newsletters aimed at day traders. These sources of information often come from "pump and dump" specialists.

Keep in mind that many so-called "educational" books, videos, and courses relating to day trading are not objective, particularly those that make exaggerated claims about profits, those that claim that day trading is an easy path to riches, and those who attempt to sell you another product or service.

Your best protection, is ,of course, to simply apply common sense and a dose of skepticism when considering the purchase of a day trading product or serve. As the old saying goes, if something sounds to good to be true then it probably is.

A crucial aspect of day trading Money management, also referred to as "risk management, is absolutely critical to successful day trading on an ongoing basis. Many traders regard it as the single most important aspect of trading. Indeed, lack of proper money management is a major cause of failure among new traders. There is little doubt that practicing good money management will lead to more traders being able to achieve success, or to avoid devastating failures.

One of the main ideas behind money management is to preserve capital so as to enable one to live to trade another day. Before you ever enter a trade, the first thing you should ask yourself is how much money am I risking here and can I afford to lose it? One of the most common mistakes new day traders make is that of "risking the whole wad" on one or two stocks.

There is not a quicker way to face disastrous results than engaging in this practice. Bearing too much risk in trying to secure a huge win in a single stock isn't worth it, if the risk can knock you out of the trading game due to a very large loss of capital. Attempting to get the big win may be exhilarating, but failure in the attempt can wipe you out.

There is a so-called "rule of thumb" in the day trading world which states that you shouldn't risk more than 2% of your total trading capital on any one trade. Doing so ensures you can make many bad trades and still not be knocked out of the game. Despite this general rule of thumb, many traders will define their maximum risk tolerance level differently. Larry Hite, an experienced day trader, has said: "Never risk more than 2% of your total equity in any one trade. By risking 2%, I am indifferent to any individual trade. Keeping your risk small and constant is absolutely critical." The idea here is that no one trade is going to significantly affect you if it results in a loss. If a trade goes against you, you are not going to go broke, or have to sell your house, car, art and jewelry in order to continue trading. The way to define risk for purposes of the 2% rule is by determining the loss you will incur if the stock price goes down. For example, if you own 1000 shares of XYZ at Rs.100 with a Rs.2 stop loss order in place, your risk is: Rs.2 * 1000 = Rs.2,000. So long as you have capital amounting to at least Rs.100,000 on hand, you would not be considered to be in breach of this "rule".

There is an old investing adage about cutting ones losses and letting profits run. What this means is that you should strive to keep your losses manageable, and ensure that no single trade does too much damage. The thinking here is that if you keep the losses small, the profits will take care of themselves. In the case of profits, you can exit the position once you have determined that you have earned a sufficiently "large" enough amount. But, what exactly is a small loss? What's a large enough profit? There is no one answer, and what is right for one trader will not necessarily be right for another.

This is an order to buy or sell a specific number of shares at the best price available at the time the order is routed to the trading floor. Because market orders are normally executed immediately at the current market price after they have been routed to the relevant exchange, these orders are almost always filled within a very short period of time. However, because a market order cannot specify a price for the shares, the actual price at which the order will be filled will be unknown until the order is executed. Consequently, if the market price of the shares is rising quickly, a market order may be filled at a higher price than that quoted at the time the order was sent to the customer's broker for execution. Accordingly, if one wishes to buy or sell shares at definite price, a market order should not be used.

Unlike market orders, a limit order permits you to specify the lowest or highest price at which you will sell or buy a specified number of shares. A limit order guarantees the price at which you will be filled, but it does not guarantee you an immediate execution - or whether your order will be filled at all. There are two main reasons for this. First, if you place a limit order to buy a stock at Rs 50.00 and the current market price is Rs 60.00, you will not be filled until the price drops to Rs 50.00 or less, which may never happen. Secondly, market orders take priority over limit orders. Consequently, even if you place a limit order to buy a specific stock at the current market asking price, you may not get an immediate fill if there are numerous unfilled market orders ahead of your limit order. In fact, you may not get filled at all if, after the outstanding market orders are filled, the price of the stock goes higher - above your limit price.

A stop loss order is an order to sell a stock at a price below the current market price. For example, suppose that you have just bought 1000 shares of XYZ at Rs. 50.00. You decide that you only want to risk Rs.5.00 per share on this transaction. Accordingly, you immediately place a stop loss order at Rs.45.00. This means that if the price of XYZ should drop to Rs.45.00, your broker will sell your 1000 shares at a market price of (or close to) Rs45.00. The use of a stop loss order will therefore pre-determine the maximum loss a trader will incur.

An order to buy or sell a specified number of shares that is routed to the trading floor for immediate execution. If the order cannot be immediately filled, it is cancelled (killed) automatically. Note that the order must be filled in its entirety. Partial fills are not allowed.