Let us start with the answer to the question, what is day trading? In short, day trading is buying then selling stocks for a day. A day trader’s goal is to earn small amounts of profit from each trade and add them together over a long time.
A good day trader knows that there is risk involved, but they can minimize it by becoming familiar with the market and watching the news carefully. Overall, there is potential in day trading, as long as you are willing to learn and spend time on it.
Start in Forex
Jumping right into trading stocks can be impossible for many- the minimum amount you need is $25,000. However, there are still ways to get into day trading without that much money. For instance, you could start by trying out the forex, or foreign exchange market.
The forex market requires a significantly lower amount of capital to get started and can be a little less risky for some people. That being said, you might want to try out a demo account before you start putting real funds on the line.
Practice with a Demo Account
Practicing with a demo account is a great idea, as it can give you some experience in day trading before you open a real account. Ninja Trader has a demo service that uses the history of the market, so that you can see how it changes during the day.
You can also try a simulation in various types of day trading- stocks, futures, and forex are all available. That way you can learn your preferred market before you start risking your capital.
Why Traders Fail
There is a big difference between a pro day trader and a beginner, but you can work to become an expert yourself. All that difference is, is knowing how to manage their money.
With day trading, you need to know when to stop, how to minimize risk, and what to look for in the market. It sounds like a lot, but it can become natural for some and soon you will be aware of the signs of a good trade.
A trader only fails when they lack the knowledge to succeed. By informing yourself, you can help yourself achieve success as a day trader.
Make the Most out of Technology
Many people today have access to technology and amazing software- so be sure to make the most of it. Good technology can give you an edge over the thousands of other day traders out there.
A phone app can give you access to information on the market anywhere and let you check on helpful charts and trends. With a strong internet connection, you can make faster, more accurate trading decisions than your competitors who do not have it.
Have a Plan for Risk
Always be sure that you make a plan for risk management. That way, you never lose more capital than you currently have. Know what percent you are comfortable risking, when you should reconsider selling or buying, and when to exit.
It is especially important to know when to stop trading for the day. Frustration can make it harder to keep a clear head and make smart choices in the market.
Day trading can be a way to supplement your income. As long as you are always willing to learn, it could become a lucrative experience for you.
You will want to stay informed, especially as a beginner. Soon, you will find yourself noticing patterns that occur every day or know when to make a retreat.
Skylar Hammond is a writer for True Trader who specializes in topics such as stock trading, personal finance, and forex. He focuses on helping beginners and experts alike learn more about the market and improve their trading skills.