If you haven’t started day trading yet, this post was made especially for you covering the 5 things needed to Start Day Trading!
At the beginning of my path as a day trader, I researched a lot before actually doing it. I read all sorts of articles and books and watched many courses and YouTube videos as well. Eventually, I realised that there were some goals I had to accomplish to become a badass day trader.
Then, I created a checklist with these goals, that I now bring to you in this article as the requirements needed to start day trading.
They are like that to-do lists we do in the morning, but instead of skincare, we create a trading strategy – instead of reading a novel, we practice our plan, and so on.
1. Learn an existing day trading strategy or create your own
Nobody is born a day trading genius. That is why we study so much, and probably why you’re here. You can create your own strategy, but why would you when so many have been successful before you?
Day trading is an activity that requires drilled and well-thought strategies. We learn these strategies the same way we learned how to ride a bicycle when we were children – we are not born ready to ride bicycles, imagine to day trade.
If you’re a beginner, I recommend learning an existent strategy from someone else you admire. In this article, the writer presents some plans that are ready for you to give them a try according to your profile.
If you’re feeling a little edgy, maybe you can collect some information and create your own strategy. This can be done by searching for recurrent tendencies in the daily price action of an asset through statistics research. This requires a lot more of study.
Whatever is the method you choose, implement it several times and monitor the results to check if it still fits you. If you’re feeling insecure, do it on a demo account first, until you have perfected it, and then move into a real one.
2. Practice, Practice, Practice Day Trading
Day trading, as the name suggests, is to be done daily. I don’t mean you should invest money every day without a break. Instead that you must study and practice your chosen strategy daily. It can be done in demo accounts without a problem.
Just as some of us perfect applying make up because we do it almost every day since we were 15, we can perfect day trading with practice.
Trading in demo accounts, in the beginning, gives you the freedom to train different strategies if you’re not sure about which to pick. After you choose it, you can train demo trading until you know when you’re ready to switch to a real account.
3. Know how much money you need to start day trading
If you want to improve your confidence in trading real cash, you can start day trading with only £100 in most trading platforms. I talk a bit more about it in this article on how much money do you need to start day trading.
Once you’ve chosen your strategy and practised it until boredom, you can trade more money.
While you’re trading in demo accounts and even while you are trading with a few pounds, you should keep some money to trade when you’re ready for more.
I recommend saving at least £10,000 to start off. But please, study and research about the risk factors of day trading before investing this significant amount.
Your capital as a day trader is like the camera for a photographer and the food for a cook. Learning how to manage her money is essential for the day trader.
4. Learn your situation
Before doing everything suggested in this article, consider your constraints and the goals you’re aiming for. For example, if you don’t have enough capital to start trading, or if you’re too anxious and can’t afford to lose the money, invest some time practising the day trade in a demo account.
A trader has to know where she is to understand where she can go to.
Consistent profit usually takes place within six to twelve months of trading, and you’ll still need to practise it for several hours a day. Do you have the amount of time it takes to do it? If you’re a stay-home-mom, are you willing to spare some hours of your housework schedule? Will your kids be affected by the time you’ll spend day trading?
If you have a 9 to 5 job, are you willing to sacrifice the hours you have for yourself to day trade every day?
Consider your reality at all times, day trading demands time and money. If you think this is not for you, you can always go for swing trading or investing until you have the time and capital required to day trade.
5. Choose a great day trading broker
Whether it is for your demo account or the real one, choosing a online day trading broker is a big deal.
It’s like choosing a partner for life. if you’re married, you know how much time (and sometimes money!) you invested in it.
I’ve written this article to help you choose your trading platform online. Remember that you’ll be trusting all your capital to them, so choose wisely!
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Now you know the things needed to start day trading… get started!
These are the 5 items I found to be requirements to start day trading. Comment in the box below if you have something to add!
Good luck and happy day trading!