To become a day trader in the stock market requires hard work, long-term planning and patience. It is a financial option that can reap great rewards, yet many people fail at it because they are unprepared to put in the required commitment. Contrary to some beliefs, day trading is a full-time job that does not allow for much idle time. In the periods when trading is slow, studying conference calls, statistics, trying out new plays, and doing various other forms of research is necessary to keep you a step ahead of the competition.
Before even starting out in the business, you need to be aware of the risks involved. By all accounts, it can be a financially risky job, and your bank account needs to be prepared to face stretches of time where you lose more money than you make. A large amount of trading capital may be needed for giving yourself a proper chance.
A good education is also fundamental. While no college degree is required to become a day trader, you still need online trading sessions, work classes, and textbooks to properly equip yourself for the challenges ahead. Devising a training program in which you test out your success with imaginary money is also important before you move on to the real thing. Expensive software programs can help out beginners in the field, but they are not very useful when it comes to feeling out the nuances of the trade.
When it comes to following other people’s advice, you will face tricky decisions. Having a veteran in the field to guide you along can be invaluable, but basing your strategy simply on what others are doing is not always the right step. A day trader needs to stick to his own plan, regardless of the direction others are taking, and be prepared to face the consequences.
Deciding what types of financial instruments to trade is a big part of it too. Volatility and price movements are key factors, as is finding the time to trade stocks and options. To become a day trader, you need to establish your own style and personality, which will depend on how you manage these instruments.
Several investments to get you going are necessary. In becoming a day trader, you need a discount broker with online trading who can provide you with what you need for a good commission. Investing in newsfeeds, quotes, and charting packages is essential for your daily business. Successful day traders are those who know what they need and are dedicated to weeding out the faults in their strategy. Although between 80 to 90% of individuals who endeavor to become a day trader fail, adhering to your principles, keeping informed through research, and maintaining a consistent work ethic are important steps toward making your fortune.