The Absolute Beginner’s Guide to Day Trading


Are you looking for additional income?  Thinking about other methods to earn some money? Have you considered day trading?

There are strategies for day trading, however. Day trading involves selling financial instruments multiple times throughout the day to take advantage of gains. It can be a dangerous or rewarding game depending on if you know how to play.

Check out our beginner’s guide to day trading to help you get started.

Knowledge Is Power

Before you get started, you must get familiar with the stock market. You will need to learn basic trading procedures and also keep up with the latest events and news that affect stocks. These items include economic outlook, Fed’s interest rates, product development, etc.

You need to learn how to understand chart patterns, trading data, and technical analysis, so check out sites like SmartTrader. Day traders buy and sell stocks throughout the day, so you will need to do your homework and have a list of stocks you would like to trade.

Scan reliable financial websites and business news to do your homework.

Determine Your Funds

Before starting, determine how much capital you are willing to risk on each trade. Typically, traders risk less than one to two percent on their account per trade. You should also set aside a surplus amount of funds to trade with so that you’re prepared for a loss. 

You should only invest the amount of money you are willing to lose, like gambling. Don’t use money that you need to pay bills in the near future like a mortgage or car payments. 

Make Sure You Have the Time

You will need to have adequate time available as well. You should be available to make trades throughout the day.

You need to be able to track the market and spot opportunities, so this involves doing homework when you are not trading so you are ready. You should have your list ready before the day begins. You also have to have time to dedicate so you can move quickly because that is key.

Start Small

It’s best to start small as a beginner and focus on one or two stocks a session. You can learn what to look for. You can also trade fractional shares, so you can still play with larger stocks. 

For example, if a stock’s shares are trading at $200, and you only buy $50 worth. Many brokers will let you purchase that one-fifth of a share instead of the whole amount. 

Be Realistic

You don’t need to win all the time to be profitable. Some traders only win 50 to 60 percent of their trades, but they make money. 

You need to make sure the risk on each trade is limited to the set percentage of the account. Your ultimate goal is to pick stocks to be ahead of the benchmark index. 

Be wary of “hot tips.” Do your research and choose a few stocks to follow. You will need to move fast, but you don’t have to think fast because you should stick to your plan and not let your emotions get the best of you.

Your Beginner’s Guide to Day Trading

Following this beginner’s guide to day trading helps you get started as you think about day trading. You will need to find the right brokerage account and make sure you have a realistic budget, using only money you are willing to lose.

If you are looking for more financial information, keep checking out our site on other ways to make money, save money, and budget.

Jeff Campbell

Jeff Campbell is a husband, father, martial artist, budget-master, Disney-addict, musician, and recovering foodie having spent over 2 decades as a leader for Whole Foods Market. Click to learn more about me

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