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Step 1
Learn about day trading. Take advantage of all the free information available about the stock market and individual stocks at such websites as Motley Fool, Bloomberg, Forbes and Smart Money (see Resources below). These are respected sources that offer useful information for beginning day traders as well as more sophisticated investors.
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Step 2
Choose a trading plan. When you trade stocks for a living, you have several options on how to trade. Day traders try to make money each day from small price changes. You can do this by buying and selling individual stocks or by trading indices, which are groups of stocks like the S&P 500. With day trading, you need to decide what to buy or sell and when to buy or sell it. Day trading involves constant monitoring of the stock prices and the ability to place an order quickly. There are no rules except doing what works best for your unique situation and temperament.
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Step 3
Practice trading with online games. Years ago people use to trade on paper to give themselves confidence to trade in the stock market. Now there are online stock trading games that give a player virtual money to buy and sell stocks. This is an excellent way to test your trading skills in real-time. Investorpedia's Stock Stimulator is a free online game (see Resources below).
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Step 4
Open an account with a stockbroker. Once you are ready to start trading, you need a stockbroker to execute the trades. Research stockbrokers at "Forbes" and "Business Week," two publications that frequently rate brokers. If you plan on making all the trading decisions yourself, using a discount broker will save you a lot of money on commissions. If you plan to place your own orders online, make certain that the broker uses an order system you can easily understand and use (see Resources below).
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Step 5
Trade the stocks of companies whose products and services you know about and use. Also choose stocks with good earning history, especially in the last 3 to 6 months. Low debt, steady dividend distributions and high cash flow are other good indicators of a good stock. Value Line offers a service that provides important financial information about most of the stocks traded on the major United States exchanges (see Resources below).
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Step 6
Start trading with small amounts. Only trade with money that won't cause financial hardships if you lose it all. Whether you have $500 or $20,000 to start trading with, devote only a small percentage of your money, because in the beginning you will make mistakes. Even if you did well in online trading games, investing with real money is very different. Being disciplined and adhering to your trading plan is important for your success.
