Are you interested in day trading but aren’t quite sure how to get started? Many people hear rumors and misinformation about the job and decide that it’s either too stressful, is for well-heeled investors only, or is exceedingly difficult to learn. None of those fears is based on reality. In fact, whether you’re thinking of working for yourself or signing on with a firm, the job is no more stressful than most others in the investment industry.
Additionally, there’s no need to be rich or have superhuman skills. In many ways, day trading is like other job skills. You can take time to learn the essentials, practice on a simulator for a few weeks, study hard, and specialize in one or two stocks. It’s possible to shorten the learning curve by quite a lot. Here are five actionable steps that can make the road to day trading a successful one.
Learn the Basics
Fortunately, there are hundreds of day trading for beginners courses available online. Both for free and for a fee. Consider trying one or two of the no-cost selections first just to get a taste of what the whole job is about. In a nutshell, it involves buying stock, holding it for a short time, and then selling it for a profit.
Further, the day in the term derives from the fact that practitioners never hold a position overnight. As far as basic information goes, there are main skills to learn. First, selecting the various companies that present good opportunities for profit. Also, knowing how long to hold a position before selling. Finally, understanding technical indicators that can reveal the future price direction of a given company’s stock.
Start On a Budget
One of the biggest misconceptions about day trading is based on outdated information. Long ago, it was nearly impossible for individuals to take part in this kind of short-term buying and selling unless they were wealthy. That is no longer true.
Today’s professionals, whether they work for a large company or as independent agents, can get started with less than $500. From there they can slowly build up their account balance as they earn profits. Nor is there a need to make a minimum number of trades per day. If you want to learn more about operating this kind of business on a budget, check out this video here to round out your research on the topic.
One of the biggest mistakes people make in any kind of brokerage job is jumping in too quickly. The good news is that nearly every firm’s website includes a realistic trade simulator that lets you practice with fictitious money in a fake account. The beauty of the simulator is that it teaches you important aspects.
You can learn how to place orders and also can see how to use technical indicators. You’ll be able to set stop-loss points as well as you’ll know how to get out of a position quickly. All those skills are essential to developing the confidence that’s needed when it comes time to use real money and purchase or sell real shares of stock. There’s no set amount of time to spend on the simulator. Many people feel that at least two weeks and no more than six weeks is the ideal range for newcomers.
At first, you might move from one stock to another before finding a company that suits your taste. Most people involved in the day trading profession specialize in just a few companies. Why? Because focusing on one or two corporations turns you into a specialist.
After a while, you develop an inner sense of how prices move in response to the news, actions of competitors, and government regulation. In fact, there are dozens of reasons to specialize in a given industry or company. By taking this narrow approach and honing in on one or two organizations, you’ll acquire a fine-tuned ability to predict corporate behavior and learn all the intricacies of a given company.
Assessing Your Skills
What’s the smartest way to get started? The best way to know whether you’ll be successful in this interesting, sometimes lucrative career is to do a skill assessment on yourself. Rate yourself, from one to ten, in several areas. See how well you deal with fast decision-making, basic mathematical skills, or how quickly you learn new things.
You can also note whether you enjoy working with financial information day-in and day-out, how well you handle money, or whether you’re good at doing background research on companies. It’s important to practice self-discipline. All those skill areas are relevant for day traders, so be honest in your self-assessment to get a clear idea of how well you might fit into this career field.