Can I Be a Day Trader on the Stock Market?
With proper training and instruction, you can become a day trader in the stock market. Day trading isn't suitable for all traders. As the moniker says, day traders buy and sell during a single trading session. Most day traders avoid holding positions even overnight. According to "The Complete Guide To Day Trading," a book published in 2008, all day traders must ultimately develop an individual trading strategy.
Other People Are Reading
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Paper Trade
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Many prospective day traders practice in a virtual account or trading room until their wins exceed losses on a consistent basis. HowtheMarketWorks.com provides a free virtual stock exchange in which traders may practice entering stock symbols, placing orders and checking quotes. Other day traders prefer making a spreadsheet in which to record their day's trades.
At the end of each trading session, the trader tallies up the net amount. Analyzing the day's transactions helps most traders evaluate or adjust their trading system. Not all trades make money.
The next step is transitioning from paper trades to real money trades. Learn as much as possible before committing capital.
Resources
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Private trading groups offer day trader education, capital and proprietary services in exchange for a percentage of trading profits. Training may be provided in a central location or on a virtual basis. Proprietary and private trading teams may offer a deep-discount commission structure and enhanced order routing services. Obtaining rapid execution may be critical to capturing profits, according to "Day Trading For Dummies," a book published in 2007.
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Function
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Most traders drawn to day trading have some prior experience. One way to determine your suitability for day trading is to work at a trading firm. Many proprietary trading firms exist in the U.S. Working as an assistant to a day trader may provide an ideal education. Search for "trading assistant," "hedge fund trading assistant" or "proprietary trading assistant" on job sites such as Indeed.com.
Considerations
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Day traders must fund their trading accounts with a minimum of $25,000. All day trading occurs in a margin account, or access to borrowed money from your broker-dealer. According to FINRA, the Financial Industry Authority, when the account equity falls below $25,000, the trader may not day trade until the account minimum is restored. Day traders open online trading accounts to facilitate rapid buys and sells. Most use a discount broker-dealer or, as above, a private trading group deep discount structure.
Prevention/Solution
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According to the 2009 book "The Truth About Day Trading Stocks: A Cautionary Tale About Hard Challenges," most would-be day traders fail to prepare emotionally for inevitable losses. Greed, according to the author, may derail a potentially profitable trade.
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References
Resources
- "Winning The Day Trading Game"; Thomas L. Busby, Patsy Busby Dow; 2005
- "Day Trading"; Oliver Velez, Greg Capra; 2005
- "The Markets Never Sleep:"; Thomas L. Busby, Patsby Busby Dow; 2007
- "Getting Started In Exchange Traded Funds (ETFs)"; Todd Lofton; 2007
- "Winning Edge Trading:"; Ned Gandevani; 2009
- "The Complete Idiot's Guide to Active Trading"; Ken Little; 2008
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