Who Wants To Be a Day Trader?

You’ve probably come across this term even though it’s being used loosely nowadays. Technically, a day trader is a person who takes advantage of market momentum on a day to day basis. Instead of buying stock and selling it months, years or even decades after, a day trader makes sure that he buys and sells stock on the same day. He does this by watching a trading day closely and practices the normal concept of trading; buy low, sell high.

Many are attracted to the idea of being a day trader because it’s basically a “get rich quick” scheme. Studies have shown that there are currently about 8 million people, either at work or at home, trading online in the United States. It may sound simple but day trading is not as easy as it sounds. Your must have an aggressive risk appetite and possess quick decision-making skills in order to be good at this. Whether you’re cut out to day trade or not depends on a number of factors. Here are things to consider before you invest all your money in one day, as well as some tips to further enhance your day trading skills.

Get the right tools and equipment

If there’s one thing to describe day trading, it’s fast, really fast. Day trading happens so quickly, and speed separates the winners from the losers. For this you will need a high-speed internet connection, a television set, and a phone—all within hands reach. Online trading is gaining popularity in the US, so you better play smart when it comes to choosing your broker. The basis of a good online broker is how well their website works. A great broker provides the latest news, in-depth analysis of markets and corporations, financial advice, etc. Some brokers may charge high fees due to their top-class service, while some charge low fees but offer minimal services. If you want to be successful, go for the brokers that provide maximum service because you will need all the information you can get regarding market behaviors and the latest news.

Do your homework

This doesn’t mean you have to study the website and understand its rules and regulations when it comes to online trading. For starters, read the daily newspapers all the time, especially the business section. Make sure you are updated with current events both in domestic and foreign lands because these events are responsible for shaping up the stock market. You should be “in-the-know” with the news because you’ll eventually be able to identify patterns of current events and their implications in the stock market. Further, you can get constant updates on the market by subscribing to one of many newsletters of top financial sites such as CNN, MSN and Motley Fool.

Know your limit and start small

Avoid losing at all cost, but should it really happen to you, you have to be ready for it. If you’re the type of guy who gets discouraged and quits the moment things don’t go your way, you’re definitely not cut out for trading. Even the best day traders lose money from time to time, but the great trader learns from what happened and stands up again to fight. Further, do not invest all your money right away. Keep in mind that in the beginning, the goal is not to make huge profits. Rather, you should familiarize yourself with how things work. Start small and study the behavior of the prices, identify patterns, review them, analyze them. When you’re ready to play the real game, then it’s time to bet with the big bucks.