How to Become a Stock Market Day Trader

Difficulty: Easy

Instructions

Things You'll Need:

HIgh speed internet
confidence
money
online broker account

Step 1

What is day trading? It's buying and selling any stock in the same day. PERIOD ! Day traders never hold any stock over night or during the weekends because of the unpredictability of world events. Yes stocks are effected one way or the other by the entire world.

The first step after you secure a reliable computer with high speed internet connections.
Step 2

Next your will need to open an online broker account, like e trade or one of the other dozens or so online brokerage firms. Starting accounts with brokerage firms can range anywhere from $500.00 minimum deposit up to $ 75,000.00 minimum deposit. Don't worry these firms usually offer interest.

Be selective of the firm you choose cheaper deposits does not mean faster or inexpensive trades. What do I mean by trades? Every time you execute an order to buy or sell any amount of stock the firm is going to charge you anywhere from $5.00 up to $29.00 per trade. That's 29.00 when you buy and another 29.00 when you sell.
Continue reading the next step to see why this can make or break your trading day.
Step 3

Let's say you buy stock in YXZ corporation. You buy 100 shares this stock on the cheap for $ 1.00 a share. Your total cost would be $100.00 for the stock plus an additional $ 29.00 for the brokerage firm to execute the order. Total $ 129.00. The stock than doubles and you sell your 100 shares for the going price of $2.00 per share. Sweet You just got back $ 200.00. WRONG it's going to cost you another $29.00 for the firm to execute your sell order. Now your total become 129.00 initial investment plus trade fee plus and additional 29.00 trade fee. Total 158.00. The $ 200.00 return and you only profited $ 42.00.
Step 4

Remember day trading is a daily business you buy than sell in one day. Professional traders actually buy than sell within a few minutes. So the seasoned experienced day trader would of made 42.00 for just a few minutes.
The professional day trader would of used a lower charging broker with reliable execution and fast turnable and only paid $ 15.00-$20.00 per trade. Profiting him/her even more.
Step 5

Day traders trade stock hundreds of times a day. Not are are profitable trades. Day traders usually only profit 2.00-5.00 per trade but trade 100 times or more a day making him or her a couple hundred dollars.
Step 6

Sound good? It can be done and many do do it today. Day trading is not without risk. It is not for everybody. Do not quit your job. Just because your friends cousins sister in law twice removed makes 500.00 a day as a stock market day trader does not mean the majority who venture out do.
Step 7

You profits depend on:
Gaines per trade
The number of trades
Commissions or transaction cost ( as I explained above)
Step 8

My advise to you : Try paper trading first for a long time. It's a day trading version were no real money is exchanged. Google the subject you'll find many sites and brokerage firms now offer free paper trading so you can learn how it works and realize how much you could of lost or gained for that matter.
Step 9

While paper trading make sure you are conducting your own research on what stocks to buy, sell or stay away from. Information, is your best friend. Day traders generally work alone and never buy into those day trading insider trade secrets. Insider trading is illegal. Just ask Martha!

A good place to start is Yahoo!Finance (quote.yahoo.com)
Step 10

Is day trading right for you ? What does it take?
Knowledge is one thing - Understanding how the market works.
You have to be willing to fail and take responsibility for your actions. Meaning knowing you could and most likely will loose some money.

Confidence: You can not second guess, say things like I should of waited could of made. Just execute your trades take your profit or your loss than move on.

You must also be very patient waiting for the right moment thats best for your investment portfolio .

You should also establish daily goals whether earning and hopefully not losses. Don't get caught chasing losses . If your down 50.00 for that day don't waste another dollar trying to chase down that 50.00

Of course you will need Money to invest. Better if you actually have money to loose.
Step 11

Can you loose your house or your shirt investing and day trading? Sure can if you bet those items. Otherwise you only loose the amount for money you spent buying into a stock. Unless the companies goes bankrupt the stock is yours if you choose to hold onto it.
We'll go more into Stock markets and trading in out next ehow article.
Step 12

For now research, paper trade try it. it is fun being a day trader of course for us adrenaline junkies it would be.

Check out my How to recover your stock market loss article. You can click the link below.

Comments

court112878 said

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on 8/3/2009 I liked this article...however, not to be anal but it contained a lot of grammatical errors which I thought tampered with the flow of the information.