Outside of trading review time, your work is done. Day trading isn't always exciting; many days are actually quite boring. Most day traders will admit that they love what they do, though. That does make it fun, but it should never be viewed as gambling. Most day traders have brief days, working two to five hours per day.
Five hours is high. Add on a few minutes each day for preparation, and review at the end of the day and week, and day trading still isn't very time-consuming. You will have lots of time to focus on other interests. This is the end result of a lot of practice, though. It often takes five months or more of solid practice every day and on weekends before you can open a live account and expect to make a consistent income off only trading for a couple of hours a day.
If you want to start day trading, here are five things you need to plan for
All markets offer excellent profit potential. Therefore it often comes down to how much capital you need to get started. Pick a market, that way you can start focusing your education on that market, and not wasting your time learning things about other markets which may not be of help in your chosen market. Don't try to master all markets at once.
This will divide your attention and making money may take longer. Once you learn to make money in one market, it is easier to adapt to learn other markets. So, be patient. You don't need to learn all markets at once. You can learn other markets later if you desire. As a day trader, both as a beginner and a pro, your life is centered around consistency. One way to generate consistency is to trade during the same hours each day.
While some day traders trade for a whole regular session a. EST, for example, for the US stock market , most only trade for a portion of the day.
Trading only two to three hours per day is quite common among day traders. Here are the hours you'll want to focus on. As a day trader, you don't need to trade all day. You will probably find more consistency by only trading two to three hours a day. You've picked a market, have equipment and software setup, and sometimes know what is good for day trading. Before you even start thinking about trading, you need to know how to control risk. Day traders should control risk in two ways: trade risk and daily risk.
When you start, don't try to learn everything about trading at once. You don't need to know it all. As a day trader, you only need one strategy that you implement over again and again. You don't need a college degree or professional designation, nor do you need to read through hundreds of books, to do that. Find one strategy that provides a method for entry, setting a stop loss and taking profits. Then, go to work on implementing that strategy in a demo account. For forex and futures traders, one of the best ways to practice is using the NinjaTrader Replay feature, which lets you trade historical days as if you were trading in real time.
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No matter which market you trade, open a demo account and start practicing your strategy. Knowing a strategy isn't the same as being able to implement it. No two days are the same in the markets, so it takes practice to be able to see the trade setups and be able to execute the trades without hesitation. Practice for at least three months before trading real capital. Only when you have at least three months in a row of profitable demo performance should you switch to live trading.
Stay focused on that single strategy, and only trading the market you picked, only during the time you have chosen to trade. Most traders notice a deterioration in performance from when they switch from demo trading to live trading. Demo trading is a good practice ground for determining if a strategy is viable, but it can't mimic the actual market precisely, nor does it create the emotional turmoil many traders face when they put real money on the line.
Therefore, if you notice that your trading isn't going very well when you start to live compared to the demo , know that this is natural.
Day Trading: An Introduction
Start with the smallest position size possible when you first begin live trading, as this helps alleviate some anxiety of losing large amounts of money. Also, continually bring your focus back to what you have practiced and implementing your strategies precisely. Focusing on precision and implementation will help dilute some of the strong emotions that may negatively affect your trading.
We say things like, "If I only make 1 percent a day I will have over 10 million dollars in my account in 3 years! Before you go and liquidate your k and life savings, first ask yourself the question can you make money with little money? As a trader, especially a new trader, your level of optimism of how much money you can make will borderline on insanity in the beginning. Again, going back to our "Dreamer" example. But, one of the first things I tell new traders is before you do anything, make sure you can turn a profit.
If you cannot make money trading 5k dollars, you will not make money trading k dollars. The last thing you will worry about is your day trading salary. Your mind will be focused on things like how to not waste an entire life's savings in the stock market. If anyone says to you, "Well you need to spend money to make money," please tell them to keep their opinions to themselves.
The stock market is the one place that if you are careless with your money, it will leave you faster than any other investment vehicle known to man. There are a ton of options out there, and if you want to learn more about how to do this, please read the blog post - " How to Day Trade with Little Money and Keep Your Day Job ".
Now that we have listed all the stats and have talked through all the possible ways to make great money day trading let's ask ourselves a really important question. I'm willing to bet that few if any of you reading this article are contemplating working for a large bank or trading firm. My gut tells me that you have landed on this article because you are thinking about venturing into the world of retail day trading.
Imagine you are responsible for someone or something. Really think about that, do not just skim over this point. This could mean someone's college education, helping with medical bills, or just buying them food.