- Today it is easier than ever to become a day trader. There are infomercials that offer courses on how to trade and the Internet provides a great deal of useful information about how to buy and sell stocks and other investments. Day trading can be done full-time or part-time. Some people have made day trading into a full-time income. The income potential is very good if you educated yourself on how to trade. All it takes is knowledge and a little money to get started.
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The principles of day trading are the same regardless of what you are trading. In day trading a person tries to make a profit from the small, daily price movements of investments. The trader needs to monitor the markets closely and be ready to place an order quickly when a good opportunity appears.
While day trading has proven to be lucrative for many people, the amount of money you make is determined by what you are trading. Penny stocks are low-priced stocks that can range in price from 10 cents a share to about $9 a share. Penny stocks are mostly traded on the NASDAQ. Traders with more money can trade blue-chip stocks and other more expensive stocks on the major exchanges like the New York Stock Exchange. People can also day trade EFTs or Exchange Traded Funds. EFTs are similar to mutual funds because they contain a large number of different stocks, but they are also similar to securities because they are traded on the exchanges.
Investors can also day trade commodities, which are materials that come from nature such as cotton, silver, orange juice, pork bellies and oil. Commodities are traded on exchanges such as the Chicago Board of Trade. Currencies can also be day traded. Forex is a popular investment these days as a tool to buy and sell currencies like Swiss Francs and Japanese Yen on the foreign exchange markets. -
All of the exchanges offer a plethora of free brochures, booklets and online information about investing. Websites like The Motley Fool and Bloomberg University are well-known sites that provide a great deal of information about buying and selling stocks, EFTs, commodities and currencies. Publication like "Forbes,", "Business Week," "Smart Money" and the "Wall Street Journal" are also important for learning about investing. There are online courses, home-study courses, books and videos specifically on learning to day trade stocks, commodities and forex.
Whatever you decided to day trade, make certain that you understand the investment and that it is right for your needs and temperament. Education is the key to successful day trading. Once you have learned about day trading you can test your skills playing online trading games. One game for stock trading is Stock Stimulator. - Once you have decided what you want to trade, you have to devise a trading plan. Before you start placing orders you need to know what you want to trade, whether you want to buy or sell, when you plan to place the order and when you plan to get out of a trade. In day trading you will probably be buying and selling a stock or commodity a few times a day to take advantage of price changes. You need to formulate the exit strategy that will net you the most money. You must adhere to your trading plan and have sound reasons for everything you do. Being led by your emotions is a good way to lose money.
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To trade anything, you need a broker to execute the trades. Some brokers only deal with one type of investment while others handle all types. "Forbes" and "Business Week" periodically rate brokers. The minimum initial deposit is an important criterion in finding a broker. A few brokers have no minimums like Zecco, but most require $500 to $2,500 to open an account. Discount brokers like Scottrade offer reduced commission rates and are a good choice if you want to cut down on costs.
When you are ready to start trading, it is best to start small by using only a small amount of your investment money. It takes trial and error to learn to become an effective trader. As you gain more experience and start to make money, you can make larger trades using more money. You can make a full-time living as a day trader, but it takes time and skill.
