If you hear the words day trading, you probably get excited and wonder how you can get into this world that promises good profits within a short time. One of the most asked questions in the business market is “can I be a day trader, and how?” Well, the good news is that this article will help by giving you step by step guidance on how to get into day trading. Keep reading to know how to go about it.
Day Trading Explained
Day trading is when you buy and sell a security on the same day of trading. By the time the day is ending, the trader has already sold. The most common form of day trading is always on the forex markets and stocks. It is, however, not restricted to those two options. In case you are still lost on how this is done, perhaps breaking it down will make you understand it better. Basically, you buy shares from a company because you have checked the market and seen the potential that their price will go up. You then open it and sell it within the same day and end up making profits.
It is different from the everyday norm where people buy shares and then hold on to them for many days, hoping that the prices will get higher over the next few days.
There is another form of trading called swing trading that most people mistake for day trading. Even though they share the same concept, swing trading involves keeping the position open overnight or even for many days until you see the perfect opportunity to make profits.
Benefits of Day Trading
There are many benefits of getting into day trading. Some of them include:
- Easy to do: Once you have mastered the skills such as monitoring the markets and knowing when to open and close, you will not struggle much. It is not a physically straining job, so anyone can do it, including people with physical disabilities.
- Can make you good profits: If you know how to work the figures well, you will be surprised by how much profit you can make. The trick is to take your time to learn the skills that will make you a better day trader.
- Not much capital required: Unlike most businesses that will require you to have a significant amount of money and invest in the start-up, doing day trading does not need much. As long as you have a good internet connection and you have a laptop and a mobile device, you should be able to start day trading.
- You are your own boss: Some people never fancy the idea of working under someone’s guidance. If you are one of those people, then day trading will work for you. You get to determine how long you work, when you report to work and the rules that you work under.
- Flexibility: You get flexible working hours and what makes it even better is that you can do it wherever you are. You can be on the bus, and log in to trade. Day trading can be done wherever you are, whenever you want. There are, of course, some exceptions, such as if you are hired to do it for a financial institution.
What the Life of a Day Trader Looks Like
After going through the benefits, you are probably wondering what a typical day of a day trader consists of. Even though there are some day traders and coaches who make people believe that their time is made up of them lounging on the sofa, sipping their favourite drink as they wait for the market to pick up, this is not entirely true. Granted, it is not a physically tasking job, but on an average day, a day trader has to do a lot of research. Their typical day starts with identifying potential markets. They read through news items to check out if there are dominant factors that could affect trading. They check out the strongest and weakest currencies if they are trading in forex, and they punch a lot of numbers to ensure they have got the right figures. It also involves making phone calls to business partners. In short, one has to invest their time if they want to reap the profits.