Day trading is one of the most interesting things that you can do to make money online. The number of assets you can trade has increased sharply in the past few years. They include assets like stocks, commodities, exchange-traded funds (ETFs), and forex.
There are several reasons why the number of day traders is increasing. First, you can do day trading on a part-time basis. Second, returns of day trading can be excellent. For example, many successful day traders generate double-digit returns per month.
Further, in the past few years, wages have stagnated even as inflation has risen to the highest point in years. Therefore, in this article, we will highlight some of the best strategies that will help you become a full-time day trader.
Table of Contents
Before all.. have a plan!
First of all, you need to have a short term and a strategic plan. This plan should be focused on where you are right now and where you will be in future.
For instance, if you are a college student, you should plan whether you will get into trading immediately after college or you will be employed at first. If you are already employed, you should plan how you will quit your job.
Remember, trading is a risky business and you should trade with money you don’t need. Therefore, you should do the best that you can to come up with a plan of your future.
Related » 5 Mistakes to Avoid Becoming a Full-Time Trader
Some Strategies to become a full time trader
Start early..
The first tips (this cannot be considered a strategy) to make trading a part-time gig is to start early (if possible, before 25). A look at some of the most successful traders shows that they started trading in their teens.
Billionaire Ken Griffin who started Citadel investments started his fund in his college dormitory when he was 19 years old. George Soros, the tycoon who broke the bank of England started his fund when he was 18 years and so did Buffet and Steve Cohen.
The earlier you start, the better it is for you because you are at a position to make mistakes. By the way, your are never too old to start your trading career.
..and as a part time
You should start trading as a part time job. This will help you master the art of trading while you are still employed or while you are at your work place.
If you are still employed, remember to work as if nothing changed. This is because you want a good recommendation from your boss.
Only quit your job after making sure you know how to trade and how to protect your trades.
Related » How to Trade Part-Time When You Have a Full-Time Job
Learn ..
Take time to learn the fundamentals of trading and investing. The unfortunate thing about most new traders is that they don’t take the long route to learning.
They deposit money in their brokers’ account and then start buying things that other traders are buying.
Related » Risk Comes from Not Knowing What You’re Doing
They forget that most of these traders and investors have spent decades learning how to trade. Ultimately, they lose money when the stocks or assets they are buying collapse.
Therefore, before you start trading, make sure that you take time to read intensively for a while. It will help you avoid making simple mistakes.
..and Practice
You need to practice and test your strategy. This is another important step that many traders ignore. They just start trading without testing their strategy. Ultimately, they will lose money!
Therefore, it is very important for you to practice and test the strategy for a period of not less than two months.
Most online brokers provide a demo or a practice account that you can use to day trade. A demo is similar to a live account, with the only difference being that it has no real cash. As such, a trader can experiment with the demo account, create trading strategies, and test them.
At Real Trading, we have a comprehensive demo account known as Training Mode Superb (TMS). TMS is a complete module that all traders who enrol in our program use before they migrate to a live account.
There are a number of reasons why using a demo account makes sense. First, if you are a new trader, it is a good way to learn how the market works without rising your capital.
Second, it is a good place to create and test your trading strategy. Further, a demo account can help you identify your strengths and weaknesses.
Combine trading with strategic investing
The beauty of trading is that it can make you a lot of money within a short time. However, the downside risks are also huge.
To protect your finances, you should instead combine short-term trading with investing. In this, you should invest in fixed income like bonds. You should also invest in high quality dividend-paying companies like Apple and Microsoft.
The benefit of doing this is that it will be a good way of ensuring that you have a safety net in case the trading doesn’t work out fine.
Start a trading floor
You can also benefit by starting a trading floor. A trading floor gives you an opportunity to trade in large volumes using proven strategies.
As a manager of a floor, you will have the people and the tools to execute trades for you. The floor will make trading a very interesting thing for you.
Mentorship
Another important thing you should do is to have a mentor. A mentor is an experienced person who has achieved a lot of success in the industry. They will guide you on how to identify trading opportunities and how to avoid common mistakes.
A good way to find a mentor is to join a trading floor as a trader or apprentice and learn from the team. After this, you can move on to start your floor or personal trading account.
Pros and cons of day trading
Pros
- You can day trade at any time of the day. Forex can be traded any time Monday to Friday while crypto can be traded any time and any day.
- Exciting returns – Depending on your skills, it is possible to make a lot of returns as a day trader.
- Be your own boss – As a full-time trader, you are your own boss where you control your own time.
Cons
- It is possible to lose a lot of money. In fact, most day traders who start their careers lose money.
- Mental health – Your mental health may be impacted, especially when you are constantly making losses.
- Losses could exceed your balance – At times, it is possible for losses to be more than your account balance, especially when you are using leverage.
External useful resources
- How to Become a Full-Time Trader – Wealth Within
