If you buy and sell financial instruments within the same trading day and all of your positions are closed before the market closes each day, you can call yourself a day trader. This type of strategy is used by individuals and entities all over the world and it’s becoming a more popular choice for newbies who are starting out in the stock market. If you’re interested to learn how to day trade, knowing what to expect in terms of behaviors, the research involved and the different strategies will help increase your chances of success. Let’s take a look at ways that you can prepare yourself when starting out.
Have the right mindset
Before you start looking at stock options or strategies, take a moment to think about whether your personality is suitable for the fast-paced world of day trading. You need to be disciplined, patient, independent and adaptable. You need to be mentally strong and not let your emotions dictate your actions. Only when you have the right mindset will you be able to make smart trades during the good and not-so-good times.
Practice
Luckily, there is one more way to limit your risk factor and make the right decisions. That is practice and there’s no avoiding it if you want to increase your capital. Start out by setting up a dummy account and test out different strategies without putting your capital at risk. Gain the experience you need to perfect your strategies and hone in on your areas of specialty. You’ll also build your confidence, learn to be calm in a real-world trading environment and become familiar with the different charting tools and indicators.
Invest in the necessary equipment
Having the right equipment is essential if you want to be successful. You’ll need to invest in a high-performance laptop or desktop and you’ll need to connect it up to a reliable internet connection. Having back up internet access and charting software are also necessary and you’ll have to think about signing up with a broker who will facilitate your trades. Commission splits, reputation, support and ease of navigation are all factors to look out for when choosing a trading platform.
Know the different markets
It is always a good idea to spread your net wide and try to gain as much experience and knowledge as you can in different markets. Forex, the stock market and futures are the most common playing grounds for day traders so get familiar with each. Every market has a different level of complexity and volatility, and strategies that work well in one may not work in another, so it’s important to test your strategies. Make sure to review and revise your options regularly, if not every day. Day trading is a fast-paced world and if you don’t adapt and keep on top of your emotions and education, you run the risk of leaving a lot of money on the table.
Keeping up to date on market news and any events that may affect your stocks is also necessary. Downloading the best financial news apps and setting up an RSS feed with the latest updates are two ways to ensure you keep you up to date with everything that’s happening in the financial world.