How To Become A Day Trader
Are you financially savvy and a risk taker? Are you able to stay calm when everyone else is in a panic? Are you looking for huge financial rewards and have the steely nerve to be able to make it happen? Then you may have just what is needed to be a successful day trader.
[ad#ad1]Being a day trader simply means that you buy and sell stock within the same day in order to make a profit. It is not investing your money as we traditionally know it - it is about making as much money as possible by trading stocks within a given day. For example, you could purchase $1000 worth of stock from Company A at 10 AM in the morning. At 10:07 AM, the stock rises half a point, and you sell it. In seven minutes, you’ve made a profit of $500 dollars on buying and selling that stock! Imagine the profit to be made if you did this with a variety of stocks from different companies, several times a day. It used to be that you had to have special, professional tools in order to become a day trader. Now, with the power of the internet, anybody can become a day trader and work out of their home or office!
The first step is to set up an account with an internet brokerage firm. There are many companies that do this: E-trade(Australia), DLJDirect(UK), Ameritrade(USA), among many others. Most of them have a very low commission rate of $29.95 or less per trade, so your profit margin is high. Be sure to also have access to a continuous stream of live data from the stock exchange. Stocks are volatile and change very rapidly. In the time it takes for you to turn briefly away from the computer, stock prices could change drastically. It is also important that you have at least a cash reserve of $1000 in order to be able to trade. Most internet brokers will not let you trade with less money than that.
Next, you need to decide what kind of stocks you want to focus on. Most day traders decide to focus on stocks in the NASDAQ stock exchange, because it is more unstable, which means that there are greater opportunities for stocks to rise and provide a large margin of profit.
The most important step is to then research which stocks you want to trade. In order to decide what stocks to purchase, you will need to calculate several factors. First, you must decide on a price budget according to your available cash only. Do not calculate or rely on the margins provided by brokers - always designate your budget based upon your available cash. Start selecting stocks that fit within your cash budget. Research those stocks and select those that seem to be showing a growth trend. Narrow those stocks further by researching any recent news stories that may affect their prices.
By combining your willingness to take risks with careful, constructive research, you will quickly be on your way to an exciting job as a day trader!