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Day Trading For Beginners: 6 Secrets To Consider Before Becoming a Day Trader

Thinking about ditching your regular 9 to 5 job to become a day trader? Day trading is a legitimate career that can potentially be lucrative. However, before you quit your job, you should first figure out whether you have what it takes to be a day trader. Here are five secrets you should know before making a decision:

What is Day Trading?

Before you start, it is important to understand what day trading entails. In essence, a day trader aims to buy a financial asset at a low price and sell high all within a single day, taking advantage of dips in prices along the way. For instance, you might buy Bitcoin when the price is at $40,000, see the price skyrocket to $48,000 in a matter of hours, and then sell at a 20% profit. Then the process starts again the following day. This is in contrast with long-term trading in which the investor holds onto the asset with the hope of gaining returns down the road. With day trading you have an opportunity to gain profits quickly, but you also face higher risks as compared to long-term trading, where your profits are slow and steady, but much less risky because they are based on historical patterns.

What are the right attributes of a day trader?

Before you take the plunge, you should know whether you possess the right characteristics. In particular, you need to have mental discipline, the ability to think on your feet, and respond well to pressure. If none of these traits match up with your personality, you might not be suited for day trading. Another consideration is your current financial situation. To be in compliance with the Financial Industry Regulatory Authority (FINRA), you need to have a minimum $25,000 deposited into your account to engage in professional day trading. If you don’t have this type of money or would rather not risk your retirement or savings, you could instead opt for amateur day trading status and use a social trading platform instead. Although you would make less, you would also be risking less.

What are the core principles of day trading?

A successful day trader doesn’t simply pick from a list of the best day trading stocks. They also rely on the three Ps: planning, practice, and patience.

  • Planning – Day trading requires weathering all the storms. Thus, you should develop a tried and true strategy where you determine when to buy and sell.
  • Practice – Just like with any skill, you should practice your day trading strategy until you master it.
  • Patience – Once your trading plan is ready to go, avoid the temptation to deviate.

What is the best time to day trade?

It is essential to know when to buy and sell. It is widely observed that the stock market is most volatile during the opening and closing bells, or around 9:30-10:30 AM EST and 3:00-4:00 PM EST. These periods are known as the “power hours” when you’re most likely to see price swings. As intimidating as it might seem at first, it is important to understand that your livelihood as a day trader depends on this volatility. You must develop the mindset of a tiger as it patiently waits for the right moment to pounce on its prey.

There’s one more thing left for you to complete your education about day trading. If you want to bring your game to the next level and approach day trading the right way, you’ll need to learn how to day trade stocks using a chart.

Can I succeed as a day trader?

Although day trading involves a certain amount of luck, the ones who attain financial independence have found ways to gain an advantage. In particular, they take their strategies to the next level by combing through the charts, detecting reliable patterns that help them determine when to buy and sell. This, along with possessing the right characteristics, developing a sound plan, remaining disciplined and pointpointing the right opportunities leads to success. When the economy is booming, there is no better way to make a quick buck. So if you think day trading is right for you, get started!