HOW TO START DAY TRADING (FIGURING OUT IF IT'S RIGHT FOR YOU)

As mentioned, day trading is a bit different from investing. Day traders focus on buying an asset and holding it for a few minutes. The idea is that of holding a trade for some time and then ending it before the market closes.

Investing is different since investors rely on in-depth fundamental analysis and then hold the asset for a long time. It is not Stock Trading strategies lucidity in the market's way of behaving. uncommon for some investors like Warren Buffett to buy and hold a stock for decades.

The two approaches have their pros and cons. They also have their beliefs in that some people believe that day trading is the best way to make money while others believe that investing is a safe option.

STEP 1: KNOW yourself the first step in becoming a good trader is to know yourself. This is where you do a personal assessment of yourself and your experience. Most importantly, you should assess why you want to be a trader, whether you have the time to trade, and what you want to achieve.

Doing this type of assessment is one of the most important things that you can do before you start your trading career.

For example, if you don’t have any experience in the market, doing the assessment will help you know where to start day trading. In this case, you can start learning how the financial market works and the different types of assets that are involved.

To help you in this, we have developed two comprehensive guides that we recommend you consult:

• One on-day trading, which we have already put at the beginning of the article

• A guide on how to move in the forex market

On the other hand, if you have some experience in the market, doing this assessment will save you a substantial amount of time.

At times, knowing yourself can even help you determine whether you want to become a trader or not. If you cannot handle the pressure of losing money, then exiting the industry earlier enough will help you a great deal. Possibly, instead of being a trader, you can be an investor.

STEP 2: WHAT IS YOUR GOAL?

The next step in becoming a day trader is setting goals and examining your mindset. Like in all professions, you want to have a clear goal about what you want to achieve. For example, if you are in the humanitarian industry, you want to save as much life as possible.

The same applies in the financial market. Here, you want to set realistic goals about what you want to achieve. A possible goal is where you want to start as a small day trader and then move on to manage a hedge fund or a home office. You can also have a goal of starting a trading floor, where you employ a group of traders.

The right mindset

The goal-setting part is where most people fail. That’s because they start their careers with the goal of making a lot of money quickly. As a result, in their journey to achieve this, they will bypass some important steps such as learning and coming up with a strategy.

The best mindset is where you want to establish a trading career and becoming a successful money manager. With this mindset, you will be at a good position to follow all the recommended steps such as learning and developing a strategy.

Trading part-time or for a living?

Another possible goal you might have is on substituting your income if you have a full-time job. For example, if you work in a company, you can decide to be a trader in order to supplement your income. In this case, you need to have a goal that is realistic.

» Related: How to Day Trade Part-Time

For example, you can decide to focus on trading cryptocurrencies or forex, which are traded for longer hours. You can also decide to trade in extended hours if your goal is to focus on stocks.

It is worth noting that while having a goal is important, it is part of the process. You need to write these goals down and then work towards achieving them.

STEP 3: HOW MUCH DO YOU NEED FOR TRADING?

A common question among many people is on the amount of money that you need to start your trading career. This question is usually part of the money management aspect of trading.

There are several angles to look at this.

First, today, it is possible to start day trading with as little as $50. For one, companies like Robinhood and WeBull don’t have a minimum balance requirement. You can download the application and deposit as little as $50 and buy your first stock.

The same is true with forex and CFD brokers. In the past, these companies required people to start their trading with a minimum of $500 and above. Today, this requirement has almost disappeared because of the amount of competition in the industry. These companies allow people to start trading with as little as $50.

Obviously if you start with 50$ you have to pay attention to your trades and use an adequate position sizing. Preferring above any approach the scalping, that allows you to close a trade even after few seconds or minutes (and not to remain with an empty account).

» Related: How Much Money do You Need to Start Day Trading?

Figure out how much you can afford to lose

Still, the most important thing to remember is to trade money you can afford to lose. For example, if you have $1 million, you can afford to lose $5,000. Start with such amount.

On the other hand, if you have just $1,000, it is not recommended to spend $500 trading. This is risky because it is how to start day trading in 2022 it's tied possible to lose all your money in a single trade.

In the past, we have seen many people make the mistake of taking huge loans to trade or invest only for them to lose it all. We have also seen others deposit money intended for medical cover or education purposes only for them to lose it all.

Trading rules

There are other things about this issue. For example, in the United States, there is the rule known as Pattern Day Trader (PDT) rule. It puts limits on the number of trades that you can implement if you have a certain amount of money.

There is also the way of proprietary trading, which is a strategy that involves to trade with a company's money. This is our case.