Day trading is a glamorous-sounding lifestyle – you make all of the decisions, you invest and take risks, and when it all pays off, it is because of you. However, there are plenty of stories of people making bad decisions and losing huge amounts of money as day traders. If you want to get into day trading, then there are a few things that you should learn.
What is day trading?
It’s not good enough to have a vague idea of what day trading is. Day trading is the buying and selling of financial assets within a single trading day and starting out afresh the next day. The short amount of time that you have to make decisions is something that people struggle with when first starting out in day trading. This is not something that you can do part-time, because you have to be available at all times to make transactions when the markets change.
A few definitions
Anything to do with share and stocks trading is going to be full of jargon. It can be a little intimidating for newcomers, so here are some definitions to clear up a few of the terms. Bears are traders who are pessimistic and are more likely to sell. Bulls are optimistic traders who are more likely to keep buying. Commodities include things such as livestock, oil, wheat, sugar and gold, and you can trade them. Forex is short for Foreign Exchange and involves the trading of international currencies. Your portfolio is your collection of investments. There are plenty of other terms to learn, so make sure that you are familiar with them all.
Make sure that you have a plan
You can’t go into day trading without having a plan first. Even though day trading is all done and dusted within a day, you should still have a long-term plan for how much money you want to make and by when. Perhaps you want to make enough money to buy a deposit for a house, or maybe you want to make money to spend on your kids’ university education.
Get expert advice
All traders rely on advice, from first-timers to seasoned veterans. Advice from financial and trading experts is absolutely invaluable when making decisions on what to buy. There are several great places to get advice from, and you can even get the best advice for free. One of the best places to get advice is a trading forum – try it free.
Choosing which market to trade in
You have a lot of choice when it comes to deciding on which markets to trade in. You could pick the stock market to trade in the stocks of various companies – this is a popular choice for day traders because of the huge variety. You could also go into various commodities markets to trade things such as oil, wheat and gold. If you are interested in currency exchange, then you could try the Forex markets.