Were you aware that day trading can help you quit your 9-to-5?
Day trading is the process of buying and selling shares of stocks within a day. This is something that many people get interested in doing when they enter the stock market for the first time. Unfortunately, many end up losing most of their money because of inexperience.
Learning how to start day trading can be done by anyone. However, you must be willing to follow several day trading tips to ensure that you profit instead of suffering losses. We’ll go over everything you need to know to make things simple for you.
Read on to learn about several day trading tips for beginners to build wealth!
Create a Trading Account
One of the first things you must do when figuring out how to day trade is create a trading account. A trading account is where you’ll make all transactions, so it’s best to create one as soon as possible. All you must do is figure out which platform you’d like to create one on.
Today, the trading platform you opt for doesn’t matter that much. In the past, many platforms charged commission fees for each transaction. However, most platforms have gotten rid of these to attract more customers.
Some of the common platforms that people go to are Robinhood, Fidelity, TD Ameritrade, and Webull. Check out a variety of platforms and figure out which one would suit you.
Look Into Various Companies
After creating a trading account, the next thing you must do is look into various companies. Day trading can be done with any company, so it’s best to get an idea of what industry you’d like to focus on.
When you focus on an industry, you’ll have an easier time determining whether a trade would be profitable. You’ll have a better understanding of how companies in that industry operate, so you can make money whenever certain announcements are made.
Use finance-related sites and Reddit to learn about different companies. If you have a certain type of business you’re interested in, start looking into similar companies.
Use a Paper Trading Account
One of the mistakes that many new traders make is dumping their money into a cash account and losing it all. However, day trading for beginners is easy to learn when you open a paper trading account, which is offered on many platforms.
Paper trading accounts let you trade with fake money. Anything you earn and lose on the paper trading account won’t affect your real balance.
If you have no money or need to get more experience, use a paper trading account until you’re comfortable. This will help you learn how to make trades and you can see how the market moves.
Many people are unaware of the pattern day trading rule, which prohibits traders from making more than 4 day trades over 5 days. The only way to exempt yourself from this rule is to have $25,000 in your account.
While you can make a few day trades, you won’t make much money unless you’re actively trading. Because of this, use a paper trading account until you have enough money to bypass the rule.
Keep Up with Modern Events
Out of all these day trading tips, one of the best we can give you is to keep up with modern events. Day trading can be done by studying charts, but knowing what’s going on in the world will help you capitalize on certain events.
For example, if a company is about to make a major announcement, you can capitalize by buying shares beforehand. When the announcement is made, you can sell them and make major profits.
Study Day Trading Strategies
Stock market strategies are constantly evolving because the market is ever-changing. Before you put a penny into the market, you must research several strategies so that you can avoid losing money.
When you start trading, you’ll most likely lose money in the beginning. However, following a few stock trading strategies will ensure that you can bounce back and recover losses.
Knowing strategies is crucial because you’ll have a better idea of when to enter a trade. Because day trading is done by holding onto shares for no more than a few hours, you must also know when to pull out of a trade.
Swing Trade Before Day Trading
Swing trading is overlooked by many beginners because it’s a different type of trading. However, it’s similar to day trading in that you don’t stay in a trade for a long period.
Swing trading revolves around buying shares and selling them within a shorter period of a few days. This can help you familiarize yourself with quick trades and will prevent you from losing much money. You can also earn enough money to exempt yourself from the pattern day trading rule.
Now You Know How to Start Day Trading
After reading this article, you now have a better understanding of how to get into day trading. We encourage anyone that wants to know how to start day trading to create a paper trading account. From there, you can experience the stock market without having to invest real money.
When you’re ready to invest with your money, avoid day trading with large amounts. If you’d like to further prevent yourself from suffering major losses, stick with swing trading until you’re comfortable. No matter how much you have in the bank, there’s money to be made on the stock market.
Check out our other articles to learn more about trading and other topics!