Become a Day Trader – Not That Simple
Last week saw the release of weak employment numbers. 38,000 jobs were created falling below the expected 162,000 jobs. The unemployment rate remained steady at 5.5%. While the NFP numbers were not good as expected, the fact is that the United States economy is recovering from the financial crisis of ’08. Underemployment is also on the rise in the US and around the world. This has led to many people either hating their current jobs or starting businesses on the side. Many other people are gaining interest in trading. Many have seen YouTube videos from traders who travel the world. Others own mansions and Ferraris. This fascination with folks who have already made it big in trading has led many people to enter the trading world. Many fail.
Become a Day Trader – #1 Not Easy
The first thing you need to know is that trading is not an easy task. Were it that easy, then every Tom, Dick and Harry would be trading. In fact, its one of the most challenging things that you can undertake. Also, you need to understand that 95% of all people who try trading fail. Therefore, you should not take thus decision in a hurry. Realize that it will take time for you to become profitable.
Become a Day Trader – #2 Learn
After understanding this, you need to dedicate a lot of time to learning. No person ever became a successful trader without learning. Luckily, there are many websites and books that provide you with a step-by-step step guide to trading. I recommend that you use a website known as Baby Pips (www.babypips.com). It’s the same website I used to learn to trade. I also recommend that you read books by Kathy Lien and John Elder. Having a mentor will also be of great importance to you. Having someone who has been there,done that will help you avoid making mistakes that thry did before.
Become a Day Trader – #3 Find The Appropriate Trading Approach
The Forex market is open 5 days a week, 24 hours a day. This is an important thing for any person who has a 9-5 job. This is simply because they can create a trading plan for only a few hours when they are not working. For instance, if you are in the United States, you can decide to trade during the Asian or European markets before the I official working hours. Stick with this plan. I recommend that you don’t trade during working hours. While your main goal is to quit your day job and travel the world, it will take a few years before this happens. Also, practice as much as you can using a demo account.
Become a Day Trader – #4 Create a Trading Plan
Every successful trader has a trading plan. I have written a number of articles on how to create and backtest a trading plan. The trading plan should depend on your trading approach. If your goal is to open a trade and close it within a few minutes, then you are a day trader. You should create a day trading strategy such as scalping. If you want to have a position open lasting for a few days then you are a swing trader and you should create a suitable plan. As you start, I forbid you to avoid quantitative approach. You should also have a trading journal that will help you identify the mistakes you make. Here are a few tips for you to use.
– Only specialize on a few trading instruments such as two or three currency pairs.
– Specialize in trading a few times a day. Open a maximum of three trades per day.
– Minimize the amount of leverage you use. I suggest that you use 1:300 leverage.
– Always follow your trading plan and adjust it accordingly.
– Don’t panic. Losses will always be there. Learn how to minimize them.
Become a Day Trader – #5 Your Day Job Comes First
Yes I want you to succeed in trading. However, as a new trader, your work should always come first. You should therefore put all your efforts to do a good job in the office. This is because trading might fail. As I stated before, many people who start trading fail. You might fail and you don’t want to be affected when this happens. I recommend that you avoid trading during the working hours. Many brokers will provide you with mobile apps to help you trade. Don’t use them during office hours. Also, if you have already set up a trade, avoid looking at it during office hours because it might disorient you. If you are in the loss territory, take the loss and learn from it.
Become a Day Trader – Useful Links
- Read how to Become a Day Trader on Investopedia
- Discover what it takes to Become a Day Trader on CRBTrader
- Find out what you need to start Day Trading on Vantage Point Trading