So, you’ve decided that you wanted to trade! Trading can seem daunting at first because of your potential losses, but it can also be very rewarding in many different aspects! There are many benefits to day trading such as, A LOT of personal time for other hobbies, financial freedom, and being your own boss.
Getting StartedFirst off, we need to determine what you will be trading. Many beginners assume that being a day trader trades stocks, but you can also trade futures, forex, options; the list goes on. If you’re day trading for the first time, we recommend you picking only one of these four options and mastering it before you decide to trade other types of instruments. Next, you have to decide how much you are willing to trade. While you do need $25,000 to bypass the Pattern Day Trader rule, you can definitely trade below this value, but you will be limited to three round-trip trades within a 5-day period. Round trip trades are defined as buying or selling of a security and then selling it or buying it back depending on what you do. Keep in mind that most brokers have a minimum requirement of money in your brokerage account ranging from $500 – $5000.
BrokersAfter deciding what you will be trading and how much you are willing to invest into it, you will need to find a broker. Brokers can be a little tricky with all the fees and commission they tack on, but just remember to do your due diligence. Things to consider when you are looking for a broker:
- We cannot emphasize how expensive it can get if you do not find a good broker. Commissions, margin rates, and other expenses can form a huge hole in a day trader’s profits. These commission costs can go from hundreds to thousands of dollars for traders that trade at a high volume.
- Must have good research tools at your disposal.
- Day trading software and charting tools
- The broker must have fast execution speed with real-time execution.
- Make sure that they are regulated by an agency with important metrics that they are required to abide by.
- Lastly, good customer service.