Are you considering getting started with trading, but you’re not sure what day trading is and how to become one?
As a matter of fact, day trading is one of the most lucrative ways to make money as an investor. Continue reading this article to understand the basics of day trading and how to become a successful day trader.
What is Day Trading?
Day trading is the practice of buying and selling stocks in a short period – usually within a day. The goal of day trading is to earn a tiny profit on each trade and compound those gains in the long term.
However, the retail day traders actually struggle to make money through day trading. And the minimal number of investors who do make money consistently devote their days to day trading.
In fact, day traders treat it like a full-time job rather than passive investing. They need to constantly observe the market to buy stocks at their lowest point and sell them at the highest profits.
Characteristics of a Day Trader:
To be a successful day trader, you need to have or develop some characteristics first. So let’s take a look at the essential qualities that can help you make money day trading.
● Knowledge and experience in the marketplace: Make sure you do comprehensive research and study everything about day trading. Once you feel you know everything about this job, it’s best to continue your learning process by getting experience. But start low to minimize the risks of losing the trade.
● Strategy: Successful day traders always have the edge over the market. Choose your favorite (e.g., swing trading, algorithmic trading, etc.) to develop your day trading career.
● Discipline: Since it can’t get you rich overnight, day trading requires commitment and strong discipline from your side. Remember, most successful day traders take it as a full-time job – constantly analyzing and being alert of market changes.
● Sufficient capital: Investing is risky, and day trading isn’t an exception. The only solution to minimize risks is to support the amount of money you can afford to lose.
Should You Become a Day Trader?
As mentioned, day trading is quite challenging, demanding, and risky career. But if you come with the characteristics listed above – learn as much as possible and consistently dedicate your time to it – it can turn into a highly lucrative source of income. If you decide to become a day trader and put your energy into it, remember to start small. This way, you’ll not go bankrupt if your trade doesn’t go as you’ve imagined. Instead, you’ll get a lesson and move onto your next trade.
Overall, if done right, day trading can make you a lot of money in the long run.
How to Start Day Trading?
The very first step before you start trading is to ask yourself: “Am I truly cut out for this?” Day trading is a demanding career path that only emotionally robust people can turn into a huge success. So it’s crucial to analyze your capabilities right at the beginning of your journey.
The next step to getting started as a day trader is to consider opening a practice account at a suitable brokerage. A practice account lets you trade with virtual money, so you don’t have to learn by spending the real money.
Some of the best brokerages offering a practice account include AvaTrade, Plus500, and eToro.