Interested in day trading? If so, then you are probably raring to get going, and can’t wait to start trading in the markets. After all, you are going to make thousands of dollars profit in the first few months…right?
Well, probably not. You see, day trading, like any other business, and it can take a while to learn properly. There are many different things to take into consideration, and it’s only once somebody gains experience that they really start to get the hang of it.
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Things such as identifying profitable trades, knowing when to buy and sell, and choosing a long term strategy all take time to develop. Until you have these sort of things nailed down, you can’t even begin to expect profits over an extended period of time.
With this in mind, it’s probably a better idea to practice day trading before parting with your hard earned cash. This is the way that the majority of successful traders started, and so if it’s good enough for them, it’s good enough for you.
Here are the steps you can begin taking right away to practice day trading, so you can learn the fundamentals and trade with no risk.
Day trading games
There are many sites out there that allow you to play day trading games, or trade with a virtual stock simulator. This is an excellent way to get your feet wet, because you won’t have the added pressure of risking money affecting your judgement.
Experts say that the best way to learn something is do it at first with no pressure or stress, so you can solely focus on what’s important and allow your brain to soak up information like a sponge.
Some of the websites worth investigating for simulation are the Virtual Stock Exchange and the Stock Simulator on Investopedia.
How long should you use a stock simulator for? The answer to this varies from person to person, as everybody learns at a different rate. Basically, when the times comes for you to start day trading with real money you will know instinctively, and you will be making profitable trades on a fairly consistent basis in your simulation account.
Check stock prices regularly
You want to make it a habit to always keep an eye on the markets. This means bookmarking different websites and checking them regularly throughout the day, and making notes of the fluctuations that happen.
Simply put, you need to become obsessed with the markets, to the point where you become very familiar with them and they almost become a part of you.
If you currently work at a day job, then you should schedule time throughout the day to check stock prices, preferably on your morning break, lunchtime, and afternoon break. Also, it can be handy to have certain Apps on your phone for the purpose of doing this, so you don’t have to be at a computer.
Study the history of markets
Once you become more familiar with how the markets are working right now, you can gain added benefits from studying the history of markets and how they have reacted over time. This gives you a serious advantage over other day traders, as most people never bother to study things that have happened in the past.
Learning about the history will give you a better overall knowledge of the markets you will be day trading in, and you might even start to see patterns on how some stocks move in certain economic climates. Having this kind of information can give you a profitable advantage in the future.
Day trading software
Another way to continue practising day trading, is to find one of the various websites that offer day trading software and then find out if they offer a demo account.
Many of the software programs do offer demo accounts, and it can be an excellent way for you to gain further experience, especially when you consider the range of features that most of these programs are equipped with.
For example, you will gain access to real-time data feeds, so you can have your finger right on the pulse of up to the minute market action.
Companies such as StrategyBuilderFX, Assent LLC, and Think or Swim, offer day trading software which can be downloaded from their respective websites and each includes a demo account so you are able to practice your trades.
Getting ready to use real money
Once you feel ready to start day trading with real money, then you will need to open an account with a brokerage firm and deposit at the least the minimum required amount. This amount varies depending on who broker and which markets you will be trading in. Your deposit will usually be available in your account within a couple of days, sometimes even less, so that you can finally start trading with real money!
It is important to note that some day trading brokers will grant you margin privileges, which basically gives you the power to buy more stocks than your initial deposit allows.
If you are granted these privileges, you definitely want to avoid getting carried away, and instead be extremely cautious with your first few trades. Resist the urge to get in over your head too quickly, and remember that all successful day traders work on a long term plan that is designed to bring in consistent profits.
Day trading forums
Once you start day trading for real, then it can be a real help to talk with other like minded individuals around the world.
One way to do this is with the aid of online forums, which can be found by doing a simple Google search. Many people gather on these forums to talk about their own experiences, ideas, and strategies, and it is very comforting to hear from other traders in the same boat as you.
Just be careful about who you listen to though, as some of the advice on day trading forums is questionable, and there are people posing as “experts” who have never made a dime of profit in their lives.