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We get asked by our family and friends all the time,” How do I get started in day trading?”. From that single question, you can have a 2 hour conversation with someone. The reality about the stock trading business is that the barrier to entry is low. Maybe a little too low. But hey, the industry is what it is and there is not much we can do about it. With that said, getting started in day trading is the easy part, making a living off it is unbelievably hard.
Getting Started in Day Trading
When I got started in day trading, I didn’t do any of the following steps. I pretty much figured everything out by myself and so I hope to save you a lot of money and several headaches along the way buy giving you a nice road map to follow.
Commit to day trading and do your research
Before you even think about funding your brokerage account, yet alone place a trade, you need to commit 100% to becoming a day trader. What do I mean by this? You need to approach trading like a business. Don’t half ass it. Put in the time to study charts, develop a watchlist, wake up on time for the opening bell, write or start a stock journal , do some more studying on night. After the day is over, guess what? You do it all over the next day.
I bring this up because when I was starting out in day trading, I didn’t take it seriously. I would trade one day, call it early and then show up to the trading session late the following day. To make things worse, I would make emotional and unprepared trades that would eventually cost me a ton of money. It is on those emotional and unprepared trades that did the most damage to my account
Once you commit, you will have to do some research. Some things to consider?
- How much money will you start out with? (see: how much money do you need to get )
- Which broker are you going to do business with?
- What strategies will you employ on a day to day basis? (see: day trading strategies)
- Which stocks will you trade? Penny stocks? Micro caps?
- Will you use any stock screeners?
- What charting software will you use?
- Will you use any indicators?
- Do you understand support and resistance? (see: How to draw support and resistance lines)
As you can see, these are some topics you want to take your time researching and getting all your ducks in order. Don’t worry about getting into the market as the market will always be there. Take your time, and come to the market prepared.
Study, study, study. Come to the market prepared. When placing your first live trade, you should have some general idea of what you are doing. Many treat the market like a casino and trade based on emotions. You want to be as cool and collected as you can be. If you are not sure what to do, it is OK to be on the sidelines and ask questions. In our day trading room, we have new members asking questions throughout the day. We are able to answer those questions live in front of everyone, all in HD streaming. You have any questions, you could private message any of our members or admin.
Finally, take it slow and use a tiny position size as you learn. Yes, that means skipping trading on a stock simulator. While stock simulators are nice, there is no emotion involved. We like our members to experience live trading first hand. This will also teach them about risk management. How large/small should their position size be? There is no limit to this. A recent new member learned by trading in only 5 share lots. We reminded him to not focus on profit/loss. His focus should be to learn one strategy and master that strategy. Now he is extremely successful trading between 500 to 1000 shares per trade but the point is he learned how to trade first before risking any real money
Finally, getting started in day trading does mean you will have to do research on which broker you will trade with. Most of our members trade with IB or for the members with less money, we have a business partnership with Clique Fund. Both options give you low commissions and with the Clique fund you get free training.