A lot of people who want to get into day trading tend to have a romantic view of it. Being able to make lots of money every day betting on the swings of the market from the comfort of your home may look like a dream. While it is true that some people are able to make a living day trading, many more end up falling straight on their face. Those who succeed are those who have the right mindset, approach, tools, and disposition. Let’s take a look at some of the things that you need to start day trading for a living.
The Right Attitude
The very most important thing in order to be successful is having the right temperament. Even with a good strategy and working capital, one mood swing could be disastrous and get you back to square one or in the red. Some might be too eager and not aware of risk when using leverage. Others might not have the patience needed to learn the fundamentals.
Successful traders are always aware of their emotional state and know how to stop when they’re too emotionally involved. They also use a strategy that suits their personality and don’t suddenly switch it when things aren’t going their way. So, you have to make sure that you have the right attitude and mindset before you get started.
The Right Knowledge Base
You will need to learn how to read different types of charts and read figures and patterns, as well as how to use and understand indicators. You will have to learn different strategies and the pros and cons of each. And you will need a lot of practice before you start using your money. Starting with the right foundation is what could ultimately be the difference between you growing as a successful trader or crashing and burning horribly on your first trades.
You will also need some working capital to get started. This is where a lot of people have misconceptions. A lot of people think that you can just start day trading with any kind of capital, but they’d be in for a surprise.
If your goal is to trade stocks, then you will need to have at least $25,000 in your account at all times if you want to day trade. This is why you will have to consider other assets. Many people decide to go with forex at the beginning for this reason. Forex is also good for people with a small starting capital as the volatility allows for greater gains over shorter periods.
The Right Broker
You then need to start looking at a broker and a good platform. You want to work with a broker that is secure, has low transaction costs, makes deposits and withdrawals easily, and has a solid trading platform.
The broker’s platform will be very important as this is where all the trading activity will happen, so you want to see things like a news feed and easy to use charting and technical tools. You want a broker that has a reputation for good customer service as well. You need to be able to contact them easily if you’re dealing with any technical issues. You also want a broker with lots of educational resources.
Making a living as a day trader is definitely possible, but you have to be realistic. More importantly, you need to have the patience required to control risk and the knowledge to be consistently successful.