Day trading isn’t for the faint of heart. First, you’ll need to set aside some money to invest. Next, if you want to become a successful trader, you’ll need a reliable trading strategy. Without a plan, you will be setting yourself up for potential failure and financial loss.
Realistically, you’ll want to find at least one strategy that works for you and grow from there. Focusing on how to practice those strategies over and over is one of the most important aspects of learning how to day trade.
As long as you start with a plan, you’ll be able to start trading—and eventually graduate to turning a real profit.
To become a successful trader, here are some other factors to consider.
Trading is mental
Emotions, on a number of levels, are a natural response to any life situation. In trading, however, learning to keep your emotions at bay is a necessary component to becoming successful. Some traders see trading as a game where they try to beat the market, and then when they start losing, they are overcome with disappointment. Emotions can ruin a trader’s experience, so it is crucial to set them aside and focus on the big picture – winning.
You need to select the right stocks
Selecting the right stocks can be overwhelming, considering there are thousands of options out there. To narrow them down, choose one or two stocks you’d like to trade, and stick with them.
To begin, you can search for stocks that are performing well on a day-to-day basis. Doing this involves a lot of research, so you’ll need to be in tune with the financial news and look for alerts that will help you determine which stocks are worth trading.
You need to find the right strategy
Once you’ve found the right stocks to trade, it’s time to find a proper trading strategy.
Rules-based trader Matt Choi’s interest in trading peaked as a child in Hong Kong.
“My grandfather, who was a stockbroker, would tell me how to invest, buy and hold. He taught me his principles and that stuck with me. After I finished college, I got really into trading as a living,” said Matt Choi.
The Certus Trading founder says the key to success in stock trading is technical analysis. The term is used to define the process of forecasting future price movements based on past price movements. Choi says that most successful traders use some form of technical analysis, or “quantify everything you see into rules.”
You need to be realistic
If you want to become successful as a trader, moving forward, you have to be realistic. This involves setting realistic goals and then growing from them. For example, a goal could be to achieve a 25% annual ROI. Whatever you decide, the goal should also be easy to measure.
Once you have set your goals, it is now time to start achieving them. Ultimately, the road to becoming a successful trader will be a different experience for everyone. The key is to ride out the ups and downs and identify patterns that will deliver you the best profits.