Day trading is the dream job of many investors who want to make good money. However, many people still wonder whether it is possible to make a living with day trading.
First, day trading requires practice and discipline, two skills most people find hard to master. Second, day trading is risky, and most people lose money. Hence, day traders need to combine practice with patience.
You won’t be a successful day trader overnight, but with the right tools and experience, you can make a career out of it.
What is Day Trading?
Day trading entails actively buying and selling financial assets within the same day to profit from rapid price fluctuations. At the end of each day, day traders close their positions and start over.
What Do You Need for Day Trading?
To day trade, you will need more than a smartphone, a laptop, and a brokerage account. You must have enough money, find the right broker, and get the right tools.
Before you start trading, here is a rundown of the things you’ll need to get your career in day trading off the ground.
According to SEC and FINRA’s rules, you require at least $25,000 to start day trading. If you don’t have at least $25,000 in your brokerage account, you can only make three or fewer day trades every five days.
Most brokers won’t let you make another day trade after you’ve done three in five days. This could force you to hold your assets overnight when you don’t want to.
Make a Plan
Before making a day trade, you need to plan it out carefully. What are you looking for right now? What trading strategies are you trying to use? Have you considered the market volatility?
When making a trading plan, you must ask yourself these questions daily. Yes, writing things down is very important when planning. Not only will you remember the information better, but you’ll also have a reminder close by in case a trade goes wrong.
Trading with emotion will likely lead you to lose money and turn a bad day into an even worse one. Keep your emotions in check by looking at your plan often.
How to Become a Successful Day Trader
To become successful at day trading, there are some things you need to understand, which we will be discussing in this section.
A successful day trader is one that never gives up on learning. Learn more about day trading daily and how to get better at it. You need to learn different trading strategies and master them.
Use the Right Software
Using the right day trading software is essential. Most brokers provide trading software to help their traders analyze and execute orders. In essence, the program offers tools for both technical and fundamental analysis. Graphs and other tools are included. All these aim to help you make successful trades.
As a day trader, you need to adopt the mindset of an athlete. It would be best if you practiced daily to ensure consistency. And the more consistent you are, the better you become. If you have developed a trading strategy, you still need to practice on a demo account to get used to the strategy.
It is a bad practice to trade with an untested strategy. It could cost you all your investment.
Day trading is hard, no matter how exciting the benefits make it look. Not only do you have to meet FINRA’s capital requirements, but you’ll also have to study and work on your system for hours and hours to correct it. But if you want to quit your current job and become a day trader, you potentially could do it with the right skills and training. However, don’t get discouraged if things don’t go as planned initially; success doesn’t happen overnight, and you shouldn’t expect it to.