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Looking to make more of a dent in that elusive savings goal?
With the new easy access to day trading opportunities that online platforms offer, it can be a way to pile up that profit and reach the dream sooner.
But if day trading is really so profitable, then why isn’t everyone doing it?
What Does Day Trading Involve?
Day traders work in securities, actively buying and selling throughout the course of the day and aiming to close all positions before the end of trading.
While active traders may hold positions over a span of days and focus on longer term strategies, with day trading the aim is in the name.
This involves multiple quick maneuvers in a short space of time, so you’ll be very much thinking on your feet.
Before You Begin Day Trading
Getting set up with a trading account is little effort and only generally requires a small minimum investment.
But far from the image of an easy life with little input, day trading can be extremely demanding.
You will need to be up on a lot of financial knowledge, be able to process a lot of mathematical information and have a stomach for risk.
It can entail a lot of input and self-directed learning.
Although buy-ins are low, if you intend to make day trading your main occupation, you’ll need to have built up a decent amount of capital to cushion yourself.
No one experiences continuous streaks of profit, and you may suffer a few periods of loss which you need to be able to withstand financially.
Get An Understanding of the Markets Before Day Trading
You’ll need a solid foundation of knowledge about financial market behaviours and human psychology in order to succeed.
There are a lot of things to learn – from complex things like macroenvironmental factors, the impact of current news, allowed tradable instruments, day trading currencies and margin requirements.
There are also more basic things to understand, such as holidays and exchange trading hours – so your knowledge base needs to be both broad and constantly updated.
Create Your Strategies
Before entering the market, you need to have planned out a novice trading strategy. It’s a good idea to have a couple of options in case one fails pretty quickly.
Avoid being impulsive and stick to the to gauge its impact in a rational way. Adapt and customize as you go along according to market behaviors and what you are learning.
You’ll also need to bear brokerage charges in mind and factor them into your calculations of profit and loss.
Day trading is based around frequent smaller transactions, which can equal high brokerage costs.
However, you can get plans which aren’t done on a per trade basis but favor a staggered model or plans that charge on a fixed basis – these tend to be more expensive but if you make multiple trades a day they can work out to be more cost effective.
Ready To Start Day Trading?
When you’re dipping a toe into the water, you should aim to start small, begin learning and then expand upon your position.
Keep up with the cycle of learning and you may find yourself finally making the money you’ve dreamed of much sooner than you thought.