What is Day Trading?

With the rise and growth of online brokerage firms, it's easy for anyone to start stock market trading. There was once a time when actively trading in the stock market was a thing for veteran financialists and big financial corporations. Things are different now; anyone can jump in and trade the stocks as their day job.

Despite the risks that come with stock trading, you can turn day trading into a lucrative hustle if you do it the right way. With the complexities, jargon, and a bunch of other things to master, it can be daunting for beginners at first. The difficulty level can be much higher for those who don't have a well-formulated strategy in place.

Since the stock market is highly volatile, it can be difficult to avoid the losses entirely, even with a strategy in place. And that's true for veteran traders as well. Therefore, the main goal of day trading should focus on your monthly profits as making returns on every single day can be challenging to achieve.

Is Day Trading Right for Me?

The whole idea of day trading revolves around the purchase and sale of financial instruments in a single day. As a budding trader, you'll have a lot to figure out and master. Some of the things to familiarize yourself with include the amount of capital needed, software, hardware equipment, trading time, and managing the risks.

Therefore, a day trader is someone well experienced, educated in financial markets, and with funding. Since day trading involves making short-term investments that end within a day, there is a high usage of short-term strategies and high leverage amounts. It requires capitalizing on the minute price changes occurring in highly liquid currencies and stocks.

As a day trader, you'll have to get the hang of the events that invoke short-term movements in the market. One of the most popular strategies is being up to date with the news, especially corporate proceeds, economic stats, market psychology, and interest rates based on market projections.

How do I Begin Day Trading?

The exaxt steps will depend on the market, and intentions of learning how to day trade. Verdasi has prepared a list of the high level elements required to begin your day trading as a source of extra income or alternative investment stragegy. We also provide a number of tips that can help guide you on the right path when starting day trading.

Choosing a Market for Day Trading

Day trading in stock offers a vast collection of markets to trade in, making it a little confusing for beginners. It's easy for starters to get swayed out of hype to jump into a market they're not familiar with due to a word or two from a friend.

When it comes to picking a market, it's prudent to rely on your capabilities in turns of capital and knowledge. Any marketplace can potentially grant you enormous profits. Therefore, don't rash to master every market at one go. You'll only end up with confused attention, and it might take you incredibly longer to start earning.

The right approach is to pick a single market to build focus on learning. After mastering the money-making skills in one market, making a switch will be much easier. While choosing a market, it'll depend on your preferences and what you can afford.

Choose Your Trading Tools

As mentioned earlier, day trading requires a sharp focus on the minor changes occurring in the stock market. Therefore, your internet connection speed and computer better be good so you don't miss any minute change that can make a big difference.

Computer and Internet

A powerful computer with sufficient processing speed and memory ensures no crashing or lagging occurs when running the trading applications. On your internet bandwidth, there should be no single compromise whatsoever. The most recommended connection type is an ADSL or cable. The speed will vary but ensure it should be above average class.

Even the slowest connection might do the work, but since you'll be dealing with multiple browser tabs, you'll notice a lag in the updates.

Trading platform

When it comes to picking a trading platform, it's good to shop around before settling on any particular one. You probably haven't figured out your signature trading style as a beginner, so it's okay to experiment with different brokers.

When you find yourself switching trading platforms repeatedly, it's okay since you're trying to determine the one that best suits you. You might want to check out Fidelity which deals in forex trading with low costs for beginners.

Day Trading Broker

Trading brokers facilitate trades on behalf of traders and get paid a commission for every trade transacted. As a beginner, it's essential to work with the brokers charging lower fees to avoid ruining your learning experience.

However, the brokers with the lowest fees aren't always the best because their customer support might be lacking. It doesn't hurt to spend a little more to get better support and save yourself thousands of dollars' worth of losses due to system hitches.

Some banks also provide trading accounts but aren't the best for starters due to the high fees.

When Should I Place My Trades?

Although it's called day trading, some markets are open outside of the standard stock market hours. For example, cryptocurrency trading continues for a full 24 hours each day.

When you learn how to day trade, you will begin to understand the importance associated to the time of which you place your trades. The success level attained while day trading depends heavily on your consistency, whether starting or a veteran. Most traders who've built steadiness did so by trading at the same hours every day. It's not a must to trade the entire day; some prefer selecting a part of the day for which to trade.

Best time for Day Trading Stocks

If you major in stocks, you should focus on trading during the first two hours after the market opens and the last pre-closing hour. Try to build consistency during the 9.30 am to 11.30 am span as it's the timeframe with the highest volatility during the day. It's also possible to experience significant price changes between 3 pm and 4 pm hour.

Best time for Day Trading Currencies

Foreign exchange markets run throughout the day, every week. One popular trading pair you can begin with is EUR/USD, as it experiences larger trading volumes, especially from 1 am to noon EST. The time between 7 am, and 10 am EST is one of the best to trade forex as it experiences the biggest movement in prices with New York and London markets being open.

Best time for Day Trading Futures

Day trading in futures is most beneficial when the markets open. Most active futures experience activities throughout the day. As such, better trading opportunities begin much earlier compared to the stock market. Focus on the time from 8.30 am to 11 am EST. The last closing hour also experiences significant moves worth considering.

When day trading, you don't have to do it throughout the entire day. Focus only on the times when the activities are rampant to build your consistency. You may only need to trade for up to three hours only per day.

Start With a Demo Trading Account

Most trading platforms offer a demo trading account for beginners. A demo account is an excellent starter pack for a start, but note that it doesn't translate to what will happen in the live trading.

It's okay to experience a reduction in performance the minute you switch to a live account. With live trading, it's your real hard-earned cash on the line, so the emotional torture experienced with the losses can be devastating.

Therefore, when you begin live trading, start small and increase your stake as you become more comfortable. Learn to precisely implement the strategies you've created and monitor their performance. Also, learn to mitigate the risks to minimize your losses. Most importantly, bear in mind that every trading day won't be favorable to you, so you might want to focus on counting your profits and losses on a weekly or monthly basis.