More Tips for Day Traders
Amount of money to invest into your new endeavor
- In day trading, it could take a significant amount of capital to see big returns. It could also take a significant amount of capital just to open a trading account (to trade stocks, a day trader needs a minimum of $25,000 in a trading account. This is a rule imposed by the SEC). The amount of money placed on any trade needs to be sufficient enough to cover commission charges and to yield a worthwhile return. Executing a trade worth $1,000 with a 3% return would be pointless. That $30 would barely cover the cost of commissions, and would leave you with nothing to show for your transaction.
Don’t trade with money that you can’t afford to lose.
- In addition, any money invested in a trade should be money that you can afford to part with. Most individuals that are new to day trading keep their previous job cover living expenses. It takes a long time to be comfortable as a day trader, and successful enough to consider it a full-time job, or a main source of income.
Decide each day how much you are willing to risk and stick to it.
- Develop a strategy and stick to it. Each day you should set limits on how much you are willing to trade, and, more importantly, how much you are willing to lose. It is very important to stick to this plan. The best day traders are extremely disciplined and will rarely stray from the trading guidelines that they set for themselves.
Keep detailed records of your trading activity and results
- This will prove extremely valuable as you progress as a day trader. This way, after a few months or up to a year, you can see what has worked for you in your early day trader career, and you will also be able to see what did not work for you as a trader. Essentially, you will be able to learn both from your successes and your mistakes.
Multiple News Sources
- News is vital to a day trader. It is very important to know what is going on in the financial world so you can take advantage of market and industry shifts. It is also very important to have access to real-time data and information. This is even more applicable to day trading, because traders need to know up to the minute activity on various sectors of the markets.
- Analytical software, which can be expensive, for day traders, is a necessity. And, while day traders follow the news, the analytical software that is available to them is even more valuable.
- Day trading software is abundant and can be found on most day trading related websites. Day traders need analytical software that contains many key features and applications. Among these are the following:
- Charts (see section on Stock Charts)
- Technical indicators
- Screeners: a software feature that allows you to input a target price. Then, the software will alert you when the price becomes available.
- Liquidity and volatility measures
- Up to the minute news and stock indexes
There are many websites devoted to rating day trading software. Some of the more popular ones are:
Stock Trading Software Reviews
Day Trading Software Reviews