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How to become a Day Trader?
Lend your expertise: what does it take to become a Day Trader?
Note: We've seen a lot of interest in this career, so we're looking for guidance from our community of professionals.
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2 answers
Sahil Kotwal
Consulting
1
Answer
Seattle, Washington
Updated
Sahil’s Answer
I began my trading journey roughly three years ago, and like many others, I experienced significant losses in the early stages. This is a common occurrence in the trading world and something you should be ready for if you choose this path. However, with time and practice, you can become proficient in trading, leading to a level of freedom that is truly remarkable.
If you're serious about making trading your profession, I strongly suggest you read "Trading in the Zone" by Mark Doughlous.
Here are some tips to guide you:
1. Start Small: Set clear rules for managing your capital. For instance, if you have a $5000 capital, decide on a risk level for entering a position. Institutions typically trade with 1-2% of their capital per trade. As a retail trader, I recommend trading within the 5-10% range, meaning you should invest no more than $500 on a single trade. Don't enter a new position until you've closed your previous one.
2. Find Your Strategy: Discover a trading strategy that suits you best. Some traders prefer trading breakouts or failed breakdowns, only making a move when their preferred conditions are met. Identify your style and stick to it.
3. Manage Your Trades: Accept that you won't always be right. If a trade isn't going your way, be ready to minimize your losses. This will help you avoid significant setbacks. I strongly advise against averaging down. When you're making a profit, set an exit price and stick to it, regardless of price fluctuations.
4. Approach Trading as a Business: Every business incurs costs, and in trading, your cost is the loss on a trade. However, there's a difference between a cost and a loss. Treat your losses as costs.
5. Mindset: Work on your mindset and control your emotions, which should remain steady regardless of wins or losses.
6. Enjoy the Process: Take pleasure in trading, but also remember to enjoy life outside of it.
If you're serious about making trading your profession, I strongly suggest you read "Trading in the Zone" by Mark Doughlous.
Here are some tips to guide you:
1. Start Small: Set clear rules for managing your capital. For instance, if you have a $5000 capital, decide on a risk level for entering a position. Institutions typically trade with 1-2% of their capital per trade. As a retail trader, I recommend trading within the 5-10% range, meaning you should invest no more than $500 on a single trade. Don't enter a new position until you've closed your previous one.
2. Find Your Strategy: Discover a trading strategy that suits you best. Some traders prefer trading breakouts or failed breakdowns, only making a move when their preferred conditions are met. Identify your style and stick to it.
3. Manage Your Trades: Accept that you won't always be right. If a trade isn't going your way, be ready to minimize your losses. This will help you avoid significant setbacks. I strongly advise against averaging down. When you're making a profit, set an exit price and stick to it, regardless of price fluctuations.
4. Approach Trading as a Business: Every business incurs costs, and in trading, your cost is the loss on a trade. However, there's a difference between a cost and a loss. Treat your losses as costs.
5. Mindset: Work on your mindset and control your emotions, which should remain steady regardless of wins or losses.
6. Enjoy the Process: Take pleasure in trading, but also remember to enjoy life outside of it.
Fred Rosenberger
Data Analyst
420
Answers
St. Louis, MO
Updated
Fred’s Answer
I would strongly recommend against it. You are effectively gambling on something where you cannot predict the outcome. It is very easy to lose all your money, and once it's gone, you cannot get it back. Even losing a little makes it harder to recover.
If you are crazy enough to pursue this, then you need to get a VERY high speed connection to the market prices. Most free services give delayed quotes. By the time you see a price, it has changed, possibly a lot. The more up to date your info is, the larger your advantage. Milliseconds can make a difference.
If you are interested in this, I suggest you read the book "Flash Boys", by Michael Lewis. It talks about how high speed traders use automation to make dozens of trades every second to take advantage of the tiniest of market fluctuations. If you are trying to beat these folk by manually buying and selling, you have literally ZERO chance.
If you are crazy enough to pursue this, then you need to get a VERY high speed connection to the market prices. Most free services give delayed quotes. By the time you see a price, it has changed, possibly a lot. The more up to date your info is, the larger your advantage. Milliseconds can make a difference.
If you are interested in this, I suggest you read the book "Flash Boys", by Michael Lewis. It talks about how high speed traders use automation to make dozens of trades every second to take advantage of the tiniest of market fluctuations. If you are trying to beat these folk by manually buying and selling, you have literally ZERO chance.