Day trading is a great opportunity to earn a substantial living by working just a few hours a day. It’s difficult initially for beginners, as it’s common to experience many ups and downs. You can’t expect to skip the development stage and jump right to success. In the early stages, your main goal should be not losing everything. If you’re interested in starting day trading, here are some top points to set yourself on the right path.
Create/Learn a Strategy
By implementing a rehearsed method, you’ll have a statistical edge with every trade you make. The RSI trading Strategy is useful as an 80-20 strategy using the RSI indicator. This can help you land great trade entries. The inspiration for your strategy will derive from watching the live charts. You will get a feel for good practice over time. It helps to ask the following questions in the early stages:
- How would you get into a trade?
- How would you get out?
- How much would you risk on the trade?
You can then determine the odds the trade will be profitable. By implementing the same method continually and observing the results, you’ll be able to answer these questions. Trial and error is sometimes the most effective method for learning, but you have to be willing to lose the money you put up. You can create a strategy by finding tendencies in the daily price action of an asset, or by learning from someone else.
Practice Makes Perfect
To be good, you must practice a lot. This is important because you’ll have thousands of hard earned dollars at stake. You can practice using a demo account before you risk real dollars. Practice methodically by implementing the same strategy over and over again. No two trades are exactly the same, and you have to factor in volatility. Failing to practice can lead to you missing trade signals. Perfect the strategy you’re working on, so when you switch to live trading you can trade with confidence.
Know the Capital Requirements
Capital for a trader equates to inventory for a store owner. How much you have and how you deploy it will determine your income. You need roughly $25,000 to day trade stocks in the United States. Forex day trading doesn’t have a limit, but it’s recommended to start with at least $500. If you want to produce a monthly income though, you’ll probably want to start with at least $5000. Day trading futures requires at least $2500, but $7,500 is recommended if you have access to this level of capital. Making an income is possible, but difficult.
Choose a Broker
When you’re practicing, you should choose a broker to facilitate your practice. You will trust all your capital with them, meaning your decision is critical. You’ll want to increase productivity over time, just like insurance companies do with the agents/broker portal at Simple Solve. This makes it easy to submit online payments, which is a key consideration on your journey to becoming an effective day trader. Balancing great execution with customer service, reputation, and competitive fees is a great way to ensure you’re working with an elite broker.