Day Trading, which is the act of buying and selling stocks within the same day, has become increasingly popular in the hopes of making money as either sole income or a secondary income.
Commonly day-traded financial instruments include stocks, currencies, equity index futures, interest rate futures, and commodity futures. Originally, day trading was only accessible to financial institutions and professional investors because they were the only ones with access to the exchanges and market data. Today, the Internet has allowed individuals to make those same exchanges at a much lower rate.
A reliable computer-preferably Windows XP or Vista-with:
Step 1
Purchase and become familiar with all day trading software products of which there are three types:
Data software provides price feeds while the chart software graphs prices and offers technical analysis feedback. Trade execution software carries out the trade.
Step 2
Open an account with direct access trading. This allows you to trade directly with specialists rather than stockbrokers. Specialists have high-speed computer connections to stock exchanges such as NASDAQ and NYSE and other electronic communication networks. This connection allows trades to be completed within a fraction of a second rather than the several minutes a conventional trader needs for execution.
Step 3
Research the company thoroughly. Research is key to successful trading. Before purchasing the stock, their history and past performance should be mapped out. Another pertinent piece of company information includes its earnings report. You will want the profit/loss ratio as well as their potential for future earnings.
Step 4
Practice the entry trades. Regardless of the market, the entry trade should move in your favor directly after your entry. If not, get out quickly as to break as even as possible. This means there will be plenty of closings around the break-even mark within the first few minutes; however, this is considered the learning foundation in order to trade for consistent gains.
Step 5
Keep up on all business news. Information on a company can be found almost anywhere, so subscribing to some or all of the following may help you find success in day trading: television, magazines, websites, and/or blog RSS feeds. Your daily effort is what will help you make smart decisions when trading. Keeping up with press releases will also be an effective way to get information as well.
Step 6
Get a mentor. Who knows better than a person who has been trading for years? A mentor provides pertinent information that a novice may overlook. You may even ask your mentor to provide suggested readings or even point you towards training courses to help you become a successful day trader.
Take a deep breath and relax. You are now ready to begin day trading.
