10 PROVEN WAYS TO BECOME A DAY TRADER

Here are the proven ways to become a day in very less time

1. Conduct a Self-Assessment

A mix of information, abilities, and personality attributes as well as a dedication to a way of life are necessary for successful day trading. Do you have the stomach for entrepreneurship, are you skilled at mathematical analysis, have a wealth of financial knowledge, are you aware of behavioural psychology in both yourself and others? Despite popular belief, day trading is not an easy way to make money or live a simple life.

long hours at work

hardly any time off from work

continuous self-education without direction

aptitudes for taking risks

unwavering dedication to the daily tasks of the profession

The most crucial condition for being a day trader is having the proper mindset. Do not try day trading unless you are willing to put in the time, educate yourself, and be mentally prepared to take risks and lose money.

2. Arrange Sufficient Capital

Nobody can continuously turn a profit. Long-term and sporadic losses are inherent in day trading. (For instance, a day trader might have eight straight losing trades before turning a profit on the ninth trade.)

A day trader needs to have a big enough money reserve to handle these dangers. Van K. Tharp outlined why starting out in the trading market with little capital is a surefire way to fail in his book Trade Your Way to Financial Freedom. Tharp advises that you have at least $100,000 set aside for trading before quitting your job to pursue trading full-time.

Depending on their chosen trading strategy, the frequency of their trades, and other expenses they incur, beginners can start with smaller sums. You must keep a balance of $25,000 in your trading account in order to day trade actively.

3. Understand the Markets

Day traders require a firm understanding of the way the markets work. A trader needs to have a comprehensive knowledge base, covering everything from basic information (such exchange trading hours and holidays) to complicated information (like the impact of news events, margin requirements, and permitted traded instruments).

4. Understand Securities

Different trading practises apply to stocks, futures, options, ETFs, and mutual funds. Starting a trading strategy without a thorough understanding of a security's characteristics and trading needs can result in failure. For instance, traders should be aware of how margin requirements for futures, options, and commodities have a big influence on trading capital and how an option position's exercise or interim assignment might entirely derail a trading plan.

Losses may result from ignorance of these securities-specific requirements. Aspiring traders should make sure they are fully knowledgeable about the trading of particular assets.

5. Set up a Trading Strategy

Choosing at least two well-established trade techniques is a good place for new traders to start. In the event of failure or a shortage of trading possibilities, the two would operate as each other's backup. Later, as experience grows, one can progress to a broader variety of strategies (with more complexity).

The trade industry is quite active. Long-term profitable trading tactics are possible, but they can also fail at any time. The effectiveness of the chosen trading strategy must be closely monitored, and when circumstances change, it may need to be modified, dumped, or replaced.

6. Integrate Strategy and Plan

To succeed in the market, one must choose the appropriate trading methods in addition to others. The following factors should be taken into account in addition to the trading plan development strategy:

Use of the strategy (entry/exit strategy)

How much money will be spent

How much cash will be used for each trade

What assets will be exchanged

How often should deals be made?

7. Practice Money Management

Imagine you had $100,000 to trade with and a superb trading plan with a 70% success record (seven trades out of 10 are profitable). How much money should you put into your initial trade? What happens if the first three trades don't work out? What if the historical average of seven out of ten profitable deals is no longer valid? Or how should you allocate your capital to meet the margin money needs while trading futures (or options)?

You may overcome these difficulties and determine your potential profitability by using money management. If you manage your money well, you can still succeed even if only four of ten trades are lucrative. Practice, organise, and structure the trades in accordance with a defined capital allocation and money management plan.

8. Research Brokerage Charges

Day trading typically entails numerous transactions, which raises the cost of brokerage. Make a sensible choice for the brokerage plan after careful investigation. A per trade basis brokerage plan might be ideal if one only wishes to play with one or two trades per day. Choose staggered plans (the bigger the volume, the lower the effective cost) or fixed plans if the daily trading volume is high (unlimited trades for a fixed high charge).

A broker also provides other trading utilities in addition to trade execution, such as trading platforms, integrated trading solutions like option combinations, trading software, historical data, research tools, trading alerts, and charting tools with technical indicators in addition to many other features.

9. Simulate and Backtest

Once the plan is ready, simulate it on a test account with virtual money (most brokers offer such test accounts). Alternatively, one can backtest the strategy on historical data. For a realistic assessment, keep consideration for brokerage costs and the subscription fee for various utilities.

10. Start Small and Then Expand

Even if you have sufficient money and sufficient experience, don’t play big on the first trades of a new strategy. Try out a new strategy with a smaller amount and increase the stakes after tasting success. Remember, markets and trading opportunities will remain forever, but money, once lost, may be difficult to reaccumulate. Start small, test to establish, and then go for the big ones.