So you have made the decision to start day trading & of course you want to invest your money efficiently and profitably, but there is one major hurdle most people get stuck at – what kind of trader do I want to be?
There are two main types of day traders: Swing traders & scalpers.
Swing traders hold on to their positions for a longer period of time, usually over night & could be many days, even weeks. Obviously these traders are looking for bigger moves than scalpers, who tend to trade in larger size, but can actually take less risk.
This is because they are trying to take very short term profits & will trade repeatedly throughout the day. Often they may risk a few pips to try to make a few pips more.
They are looking for a quick turn & will jump in and out of the market, hoping to accumulate a good profit before ending the day with no positions. Then they start the process again the next morning.
Day traders are very different to investors who hold positions longer term. They will spend all day every day trading stocks, futures, Forex, crypto or commodities,
buying and selling as quickly as possible without thinking too much about macro economics, or the business of the companies they are trading.
Scalpers do not care about the fundamentals, they just need volatility.
Fund your account
The first step in starting day trading is deciding how much money you want to invest into this career.
Day traders that start with little capital are very common, even just a few hundred dollars is enough. However I strongly recommend opening a demo account, which allows you to practise with fake money before risking your hard earned cash.
You will make mistakes & they will be costly when you have little experience.
These are easy to find as most brokers offer a demo account. I suggest at least 2 or 3 months trading fake money – but the key is to treat it as if it is your own money. You have to take it seriously or you won’t learn the necessary lessons.
A lot of brokers offer free trades for their members which is always a nice perk, meaning they do not charge commission.
They make their profits from the spread, because when you trade you buy at their offer, while another trader may sell at their bid price.
Pick your broker
Choosing a trading platform is one of the most important decisions you will make as a trader. There are many ways to start day trading, but not all brokers are designed with novice traders in mind.
Some may offer very limited features that do little to help you succeed as a trader. These limitations include no direct access to the market or poor quality investing tools like price calculators and watch lists.
Brokers that focus more on professional level services typically cost more money, which can be limiting if you are just starting out.
It’s hard to know where to begin looking for free information about the markets, so don’t feel obligated to invest in expensive tools until you have at least a basic understanding of how the markets work!
There are several different types of brokerage platforms available to choose from. Some are better than others depending on what you want out of your experience.
I use MT4 & I have recorded a video to explain how to execute trades on this platform:
You should always do some research before picking a software package to use. Look up reviews, talk to other people who use their service, and find out what benefits they had to enjoy from using it.
Here are my top 2 broker recommendations:
Choose your trading strategy
Choosing a good day trading strategy is an important part of starting as a trader. There are many strategies that can be used but you must find one that suits:
- Your lifestyle.
- Hours you have available to trade.
- Your account size.
You want to make sure you know what types of strategies work before diving in, so experiment on a demo account.
There are several different ways to start day trading with little money. The majority of retail traders now use technical analysis to identify trade ideas.
What is technical analysis?
Photo by Liza Summer on Pexels
Technical analysis is used to identify trading opportunities by analysing trends & patterns from price movement & volume. Unlike fundamental analysis, which attempts to evaluate a security’s or f
inancial product’s value based on macro economics or business results.
Learn to read charts
Photo by Nataliya Vaitkevich on Pexels
The next key element in starting day trading with little money is learning how to interpret financial market charts. There are many types of chart patterns that can be studied,
learned, and applied to help determine if a stock is under or overvalued.
I have recorded a playlist of free videos explaining some of the technical analysis techniques hat i use every day and have done for over 15 years:
If you like these videos, check out my technical analysis & day trading course. Jason Sen has over 35 years of trading & technical analysis experience.
Some day traders only want a way to earn extra money, not spend lots of money to do so. Which is why I have created a 9 module course,
to teach you everything that I have learned in over 35 years of successful day trading – and the cost is ONLY £400!!
It is a one time fee to access the course for life, but what is totally unique about my course is that you get FREE meetings with Jason Sen as often as you wish,
for as long as you want, any time in the future, with no time restrictions.
No other mentor with that much experience will offer you unlimited mentorship time for as long as you need it.
Do not risk more than you are prepared to lose
Photo by Martin on Pexels
Starting with little money can be tricky, but it is possible! You do not need too much money to start day trading. Many people have done it successfully by investing small amounts of money in the stock market.
The key thing about starting with little money is knowing what your limits are.
You should never invest more money than you feel confident will be recovered if things go wrong. And they very often _do_ go wrong for some traders.
Trading can seem expensive at first because there are lots of fees involved. But these costs add up over time. So as long as you are willing to bear this initial cost, then later when the markets move upward you will still make a profit.
There are many ways to begin investing without making large investments. By buying or selling a few shares here and there we can all enjoy the benefits of day trading.
Consider using a trading robot
There are many ways to start day trading. Some people begin by investing in large brokerages that offer daily or even minute-by-minute trades through their platforms.
Other individuals begin with a low price point, buying or selling a few dollars worth of stock per trade. The trick is making sure you have enough money for gas!
The best way to learn how to day trade is by doing it yourself. This can be done via a software platform that has educational features, or through your own set of rules.
Trading robots make it easy to enter into the market and manage your portfolio while you focus on other things. They take care of the nitty gritty details so that you do not need to.