How to Start Day Trading: A Complete Guide
If you want to be your own boss, set your own hours (more or less) and take in all of your profits, day trading is for you. In this guide, we’ll show you how to start day trading no matter your experience with the stock market.
If you’re someone who enjoys playing the markets, day trading can be a great way to make money. But if you have little to no experience with day trading, you likely don’t know how to set up your own day trading business.
This is perfectly acceptable and it’s a scenario many day traders have experienced at one point or another.
Keep reading and I’ll show you how to start day trading. Take action and it won’t be long before you’re earning more than you get from your main job, thanks to your day trading skills.
Make Use of Paper Trading
If you just start a day trading business and don’t educate yourself, you risk losing a lot of money.
One of the best ways to learn about day trading is by doing something known as ‘paper trading.’
Paper trading is essentially when you’re trading using ‘fake money.’ By doing things this way you get the chance to learn how day trading works. You will also be able to develop a feel for how the interface works, in terms of the day trading platform you’re using.
You should focus on doing paper trading until you can consistently turn a profit. That way, you’ll have an increased chance of success, when you finally start trading with actual money. There’s no telling how long it will take you to get to this point. It will ultimately depend on your current skills as a day trader.
Learn From Others
You can speed up the process by learning about day trading, from people who have already had some form of success.
You don’t necessarily have to invest in expensive courses to make this a reality. There are plenty of YouTube channels where successful traders are giving away their knowledge for free. You’ll also find a list of courses available on sites like Udemy.
What you really want to learn is the technical aspect of trading and what the jargon means.
This will make it easier for you to dissect news reports and turn that information into actionable steps that’ll make you money. For instance, if you’re reading a report on the best dividend stocks, you’ll know what everything in that report means.
What Is Your Strategy?
Once you’re aware of how day trading works and you have a sense of the different aspects of day trading, you then need to develop a strategy. A strategy is designed to help you remove emotion from the equation.
You may not realize it now, but day trading can be a very emotional game. You may see a stock falling in price, but you might not want to sell it.
You might think that the stock is eventually going to rebound. But doing things this way can lead to you losing all your money and ending up in a situation where you’re out of pocket because you didn’t cut your losses.
If you have a strategy, though, it’ll be a bit easier to avoid situations like this. Your strategy will dictate how much a stock should fall before you decide to cut your losses.
The key thing here is that you stick to your strategy. It’s no good having an amazing strategy if you ignore it when it is most needed. You can always develop your strategy over time and you don’t have to have a perfect one, to begin with. The more you learn, the better your strategy will become.
Picking a Broker
If you’re already doing some paper trading, you likely already have worked with a certain kind of broker. But you don’t need to stick with a broker if you don’t like their platform. There are generally three key aspects that decide whether you should work with a particular broker.
The first is the fees they charge.
You need to make sure you’re aware of how much you have to pay in commissions and general fees when you make a trade.
If you’re not aware of these numbers, you run the risk of losing a bulk of your profit to fees.
Brokers will often have a section on their website that’ll teach you what kind of costs you will face if you decide to use them as your chosen platform.
The other thing that’ll dictate who you work with is the interface of the software.
Some brokers can have software interfaces that are difficult to use. You may also find that a software interface doesn’t make it easy for you to find the information you need. If this is the case, you might need to seek out another broker.
You’ll also find that the ‘markets’ will decide which broker you work with. More specifically, the markets that the broker allows you to trade on. You might enjoy trading the stock markets of other countries. But not all brokers are going to be able to provide this. Following this, you’ll need to find a broker that can.
Speak to a Lawyer and Accountant
If you want to keep your accounts easy to manage, it helps to set up a separate entity that you use for trading. It can be a good idea to speak to a lawyer about how you should do this.
You might also want to consider reaching out to an accountant. They’ll be able to help you manage your books, once you do start trading. This can make it easier to keep track of everything. This is important if you’re going to be making a lot of trades.
Do You Know How to Start Day Trading?
In this post, we’ve reviewed some of the things you need to think about if you’re interested in how to start day trading. You need to learn how the markets work. You also need to go about picking a broker you’re happy to work with.
If you want to succeed with day trading, you need to make sure you have a strategy.
A strategy will make sure you don’t miss out on opportunities to make money. It’ll also help you cut your losses if one of your investments isn’t going as planned. Provided you stick to your strategy, you should be able to increase the odds of success.
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