Although day trading is a high risk, short-term trading strategy, the risks can be avoided if day traders primarily feel comfortable with their knowledge of financial markets. This means knowing how the market behaves, why it behaves in particular ways under particular circumstances, how investor behavior causes the market trends to change abruptly, etc. Market knowledge is extremely important not only in day trading, but also in full trading as well. However, in day trading it is more important due to the higher risk involved in the process.
In addition, day traders should have an understanding of how margin trading works, what are the requirements for effective margin trading, how much time they have available to make a margin call, etc. As already explained, trading on margin is extremely risky and, therefore, it requires a thorough knowledge of its mechanisms.
Finally, avoiding over trading is another suggestion to reduce or eliminate the risks of day trading. Given that over trading requires a particular ability to handle its complexity, day traders should balance their trades to avoid huge losses, especially in the beginning stages.