Day traders play the stock market with a zeal similar to gamblers, often with the same results. Usually it's bad timing, bad data or poor choices with stock picks that lead to a bad reputation about day trading, but for those with the guts, the determination and motivation to study, plan and execute, day trading can be a success.
It's a lot harder to succeed when you go for it alone. You have to do all of your own copious research and legwork to avoid losing lots of money. That's why many people opt instead to use automated day trading software, which requires a small investment in itself but makes lots of sense for those with little time to spare and a desire to make money. If this sounds like you, I definitely suggest you start by checking out Day Trading Robot.
The first step in becoming a day trader is opening up an account. There are dozens of online accounts available with trading platforms that are easy to follow and understand. Do research independent of each accounts website to learn information about how quickly they execute transactions, how quickly they settle accounts, how long it takes to collect money once you decide to withdraw, and more. Anyone planning to become a day trader should have money to burn. Not literally. What that means is the money used to start a day trading account should not come from funds that are needed to maintain a household or lifestyle. In fact, many companies recommend having a three to six month cushion for finances while a day trading business gets off the ground.
Once you open up a day trading account with a broker, and learn how to use the platform, it's a good idea to practice "paper trades" for a week. This practice can show you how to time the market, how to set and execute a plan, and when to exit a trade. The idea that the trading is all on paper means there's not chance to lose money on any trades until you feel comfortable with the how of executing the trade.
Next, more research is necessary. Don't just follow tips and hints given out by any one of hundreds of gurus who know about the next big thing. Research means selecting a company, studying the financials, researching the headlines and trends that may apply to the stock price, and creating a plan. The research phase can be either as detailed or as off the cuff as the day trader feels comfortable with. Some trades are just easier to research than others.
Now it's time to create a trade plan. Select the stock, place the order, watch the execution, and keep an eye on the stock to create an exit strategy. Many day traders will not hold an order open overnight because of the effects the world market can have on a stock price. Hence the name, Day Trader, as opposed to swing traders who hold onto a stock order for a longer period of time. Most Day Traders settle up before the closing bell, and spend an hour or two preparing for the next day's research.
Day Trading isn't as glamorous as it sounds. It's a very research intensive job with the potential for heavy financial losses. It also may require a good deal of time watching the news, and keeping an eye on the trading platform for an erratic swing in the market. However, with the availability of smart phones with web access means day traders aren't as tied to a desk as they have been in the past.
The key to success is smart research and smart execution. Day Trading can be a very lucrative career that allows for the freedom that comes with independence of a boss and a daily nine to five grind. But it's also requires a little streak of the gambler, and a healthy respect for risk.