How to Start a Career as a Day Trader
Many
people now day trade on a full-time basis. The concept behind
day trading is that you buy and sell stock within the same
trading day. Day traders aim to profit from the volatility or
trend of a stock that occur during the trading day. This
includes trading options, currency, metals and other
commodities.
There is a certain amount of risk involved
with day trading, as with any form of investing. So you should
be confident about your risk tolerance before embarking on day
trading as a career.
What do Day Traders do?
Day traders
spend most of their days studying trends and news about
industries and companies. This can range from economic issues to
management decisions.
Since day traders are technical
investors, they are more concerned about trends in the price of
a stock or commodity. They look at various indicators to
determine when to buy and sell a stock.
For example, a
trader may buy stock when they see the price of the stock has
been rising and believe it will continue to rise, or vice versa.
They will then sell the stock once the trend has broken.
Other trading strategies include investing inpenny stocks and
channel trading (also known as swing trading), among others.
Nowadays, many trader look to emerging markets to invest in,
though day trading may not be easily accessible in certain
countries.
Many day traders use trading and charting
software to facilitate their trading activities.
What is required to be a Day Trader
Naturally,
you need money. You should have at least $25,000 in reserve
funds that you are comfortably willing to invest to start up.
You will need to apply for a trading account. Depending
on the regulations of the markets you are trading in, as well as
the regulations set by your broker, you will be allowed a
certain number of day trades in a business week for your account
to be classified as a day trading account. Check with your
broker about regulations, so that you avoid any trading
violations.
Margin trading gives you more leverage than
cash trading, but it also adds more risk. With a minimum balance
of funds in your trading account, you can trade on margin up to
4 times the cash value in your account. So if you have a $50,000
cash balance, you can trade up to $200,000 on margin.
You
would be wise to invest in some good day trading workshops,
books and workbooks if you are not yet experienced with day
trading. In fact, unless you have at least some experience in
trading, you should really consider starting your day trading
career on a part-time basis.
Some tools you'll need are a
computer (either desktop or notebook is fine), spreadsheet
software, charting software and an Internet connection.
You may also want to consider joining day trading subscriptions
such as channelingstocks.com to aid you in stock analysis.
More Resources about Day Trader
- How to Begin Day Trade Investing Online From You home
- Why Become an Independent Day Trader
- Online Day Trading Tips
- Build a Day Trading Business. Learn to Win
- No risk No Gain – Day Trading
