Day trading has become popular as stories of people leaving their jobs and making a living from just a few hours work a day pop up online. However, that reality is far away for anyone just starting out and may never become the reality for some people. Day trading is like any new job – there is plenty to learn before you know what you’re doing. Deciding to become a day trader is not a decision that should be made without some serious thought as it can take months or even years to make a steady profit. Let’s have a look at the steps you should take to start day trading.
Create a Strategy
Your strategy is like your business plan and like every new business, you need your strategy for success. Creating your strategy will take a lot of time and effort. You will need to read up on day trading online and work out the strategy that will work for you. This will also involve working out how your personality will impact and work with trading. Work out your triggers, what makes you anxious and what encourages you and then use this to create a strategy that will work best for you.
2. Choose a Broker
Before you can begin trading you need to choose a broker. There is a huge selection of brokers online, but not all are equal and you need to make your choice carefully. Firstly, do your research – read reviews about the broker online and on social media. Open a demo account and try out the site. Then open a real money account, trade for a while and try to make a withdrawal. Make sure you have no problems along the way and that any questions you ask are answered in a timely and helpful way. If all goes well, you have found your broker.
The best way to become good at anything is by practicing and the same is true for day trading. Fortunately, most brokers have demo accounts which are free and which are a great way for you to try out your strategy and practice your skill. These demo accounts work like real trading accounts; however, all trades are placed with virtual money. This allows you to place real trades without risking any of your capital so that you can follow how the trades you would have placed are performing. Once you feel confident, you can open a real money account with only a small amount of capital. Place small trades for a few months to see how your strategy is working out. If that goes well, you can start placing trades with the hopes of making a profit. You should follow this step for a few months.
4. Re-evaluate Your Strategy
Your strategy is not a plan that you create once and then forget about. A strategy needs to be re-evaluated constantly. This will include re-evaluating your goals, re-assessing how your personality fits in with your trading strategy and re-analyzing how your strategy is working out.