Day Trading

Is day trading for you?

If you are considering a career in trading, you have many options. Perhaps your best option to get your feet wet and to truly decide if trading in the securities market is the right career choice for you is to enter the day trading market first. Setting up as a day trader is somewhat simple to do. Remember before you take the plunge make sure you have the capital to invest before you take a risk by investing in securities.

Problems Experience in Day Trading

1. Not enough liquidity to be available to solidly enter the securities market. Market makers sell in lots of 100 and frown upon selling what is called an odd lot, which means less than 100 shares.
2. Understand the spread, because it will make you of break you, literally. If you end up losing an incremental amount of the spread, you stand to lose thousands of dollars per day. You can bankrupt yourself very quickly if you don’t understand what you are doing.
3. Know the market and understand the lingo before you attempt your first trade. This is not a business for an ingénue. Just as a broker who works for a brokerage firm must understand the market, a day trader has the same responsibilities, only on a smaller scale.
4. Don’t quit your day job until you can actually see success and you are turning a significant profit, because day trading is not an exact science.

Once you decide you want to start day trading, there are a few steps you need to follow.

1. Saving is the key to startup – Make sure you have a significant amount of money saved before you start. You do not want to be working with money that is necessary to maintain your family’s standard of living. Make sure you are working with disposable income only.
2. Open an account – You will open an account with a Level II platform direct access brokerage.
3. Buy your first stock – Go ahead and take a chance, make your first trade and don’t become discouraged if you are not successful the first time.
4. Understanding stop losses – Stop losses are your friends and act as a mini insurance policy to prevent you from losing too much money.
5. Dedicate the same amount to trading each day – Depending on the market you are trading in, set the same time each day and period of time to devote to your trading.
6. Know the markets – Read everything you can get your hands on that will give you information on the markets.

Once you feel that you are ready to start a second career in day trading, the get out there and start trading. Make sure that you enter the market armed with all of the information and knowledge necessary to be successful. Happy trading!