Day trading has seen a boost in recent years, with both hobby enthusiasts and expert traders being drawn to it. The concept of trying to make money from buying and selling over a short period of time can be both risky and rewarding.
If you’re looking to get started with day trading, your chances of being successful increase with more research and knowledge. Here’s a short guide on how to get started.
What is day trading?
Day trading can be done in any marketplace, but traders often choose the stock market or forex market. It can also be done with, for example, cryptocurrency. The point is that you buy and sell a financial instrument (like stocks or forex) within the same day or multiple times during the same day. By using the small price fluctuations on the markets, you can earn money if doing it right.
Best day trading platforms and accounts
Before starting, you want to look for the best trading accounts and platforms. The account types can vary significantly depending on which broker you choose.
The best start for beginners might be to open a demo account where you can try things out without risking any real money.
Retail trading account
A retail trading account is a relatively simple account where you choose a broker, open an account, and make a deposit with your own money to start trading. This is a common choice and convenient for people who are new to day trading.
Micro trading account
Micro trading means smaller trades in forex and CFDs, Contracts for difference. They can be useful when you start out trading on a new market.
Professional trading account
A professional trading account, on the other hand, requires you to have a large investment capital and proven levels of expertise.
In addition to the accounts above you could also come across other types, such as PAMM, ECN and managed accounts.
What you need to day trade
In order to become successful, you need a basic understanding of the market. This involves looking at charts and doing technical analysis, as well as following the news. There are several different strategies, like arbitrage and swing trading. By using these sufficiently, you could lower the risks of losing money and increase your profits. Finally, you need discipline to follow through with your strategy of choice.
Tips on day trading: Risks and rewards
Some claim that day trading should be treated as a job, not a hobby. However, think twice before quitting your job in order to start trading, especially if you’re still a beginner. Keep learning, stay curious and focused, and don’t base your decisions on emotions.
Trading comes with a risk and it’s important that you don’t invest money which you can’t afford to lose. The risk is also what makes day trading attractive to many people since it comes with potentially high rewards. Without the volatility on the market, day trading wouldn’t be a thing. Day trading is fast and requires you to stay up to date with the news and market movements.
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