Let’s first agree on what a day trader is. A day trader enters and exits trades throughout a day. Holding times may range from 1 minute to 1 day, and they may trade anywhere from 1 to hundreds of trades daily. It is very common to think that becoming a day trader requires various financial certifications, degrees, and a lot of financial experience. The truth is anyone can be successful day trading without having to go that far. Every day people with little to no experience are getting started and are achieving amazing success. It must also be stated that without the proper preparation and discipline – you can lose a lot of money. What is most important is the work you are willing to put in along with the goals you will be setting.
Your first area to focus on will be research. You should be very capable searching the internet. This will probably become very tedious, but it is essential to your success as a day trader. Begin with searching the internet for “Day Trading” programs that offer training, support, and most importantly a user forum. User forums offer the best platform to ask the easiest to most complicated questions. Forums are a great training vehicle. Make sure the day trading system you select has a trial period. Don’t worry, there are many systems out there to choose from. It is best to trial one system at a time, preferably with a trading simulator. You must be absolutely confident with the system that you choose.
Next you will have to research and decide which type of trading instrument you will day trade. Three of the most common and appropriate for day trading are Stocks, Futures, and Forex. There are pros and cons to each. Important considerations include required capital, hours of the day that you can trade, instrument liquidity, how easy or difficult is it to track gains and losses for tax purposes, etc. Here are common capital requirements: The minimum requirement to day trade stocks is $25,000. Most direct access brokers will require you to open an account with $5,000 for Futures. Forex accounts can be opened for as little as $500.
After you have identified your preferred trading instrument you should begin researching technical analysis, or what is most often referred as chart reading. Day traders must avoid directional bias throughout the day. Day traders must rely on their chart analysis and quickly be able to change their long or short positions. The same trade management rules apply regardless if you day trade, swing trade, or trend trade. Cut your losers quickly, and let your winners run. The understanding of technical charts is critical. However you don’t have to become a technical guru to be successful. Aim to grasp common reversal or continuation patterns when starting your trading. If you choose the correct trading system, focus on understanding the system’s buy and sell signals.
Lastly, it is always a good idea to just generally watching and learning about the markets. Diving right in to your trading can be a very costly mistake. If you are truly serious about a successful day trading career, you must continually learn and monitor how the markets function. Treat your day trading as if your are running a business. Always manage your risks and make well understood decisions. You can become very successful once you select the proper systems and tools and apply your desire for financial advancement. When you begin your trading it is important to set realistic expectations. Aim for small and consistent gains. They add up! If you set a goal for $100 a day you can make $500 a week. Take action!
