How to Day Trade

Posted on July 21st, 2009 by aileen

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Day trading is buying and selling stocks, currencies and equities within the same trading day. Contrary to what other people say, learning how to day trade is easy. You just need to have some knowledge on trading and a lot of training. Here are a few simple steps to become a day trader.

Steps:

Have a good foundation. Studying is the key to trading. You have to be well educated if you want to succeed in this kind of industry. The choice between enrolling in a school or on an online trading course is up to you. Choose the one that will best benefit you.
Get day trading software. The software you need to have must be able to give you price feeds, show you technical indicators and allow you to trade.
Get some training. Once you already have the knowledge, the next thing to do is practice trading. One way of doing this is by paper trading. Paper trading is pretending to do an actual trade without money involved. You buy and sell as you would normally do in an actual day trade. This is the best way to learn different strategies and analyze various marketing data.
Learn from your mistakes. The best time to evaluate your strengths and weaknesses as a day trader is during paper trading.
Find a strategy. Use your own techniques. Don’t do something just because everyone else is doing it. Be sure to understand what is happening in the market before you decide to buy or sell.
Have a risk capital. Allocate a certain amount of money that you can use in trading. Expect that in the process of trading, you might lose this money.
Get an online trading account. This will allow you to follow trends conveniently.
Do a swing trade. After paper trading, it is better to engage in a swing trade first. In swing trading, you will have the stock with you for a few days. This is a good way of practicing how you choose the stocks you buy.
Always be updated. Events play a vital role in the stock market. They may increase or decrease a stock’s price. This is usually your cue to buy or sell a stock.
Day trade. When you’re confident enough, start day trading. Remember all the things you’ve learned and use your strategies. Don’t get intimidated by other day traders who have been in the business for a long time.

Tips:

A big capital is needed for day trading. Make sure you have proper training in order to minimize the losses that may happen due to careless and hasty decisions.
The most common technique used by day traders is news playing. Keep yourself updated on business news. Your decision to either buy or sell a stock would usually depend on what is happening in the business.
Other techniques that you can use are: trend following, contrarian and bollinger bands.
Be very careful. If you decide to join a firm, make sure the firm is registered.
Quick and easy profits are not true. Don’t believe people who say that you get easy money from day trading. This kind of business requires a lot of work. It can also be stressful.
Expect that the first months as a day trader may be really hard for you. You might have more losses than gains.

Becoming a day trader requires training and discipline. Besides an enormous amount of capital, you also need to have good decision making skills. With good training and enough confidence, you will eventually become a good day trader.