Day trading might sound like a lucrative way to make some money on the side, but for the average trader, the risks outweigh the rewards. Trading as an individual without the support network of a larger financial firm is akin to gambling. Even with top of the line technology and analytical software, only about 10% of traders actually see earnings when they first start out. This doesn’t mean you can’t be the one to buck the trend, it just means you should approach the decision thoughtfully and with low expectations. If cash is tight, you’re better off getting a part-time job than throwing your savings into day trading.
So, with this in mind, here are three things every potential day trader should know. You should be prepared to lose money it’s not the nineties anymore, as one expert trader put it. Your odds of seeing returns are low – especially when you’re just starting out. Go in with the knowledge that you will likely lose money before you start seeing returns. To minimize losses, practice, practice. There are plenty of online programs and investing courses that let you trade with fake funds before you start risking your own capital. Online Trading Academy is one company that offers programs nationwide to help beginner traders and more experienced investors brush up on skills.
Your Schedule Is Less Flexible Than You Think
Although working from a home office might sound enticing, traders tend to enjoy more success with a rigid routine. Wake up early. Read the newspaper. Check up on the market. Take some time to clear your head and unwind. Once you start trading, you need to channel a determined focus for several consecutive hours.
A Healthy Body Leads To a Healthy Mind
Day trading requires investors to spend many hours in front of a computer screen. Some traders have enormous desks with as many as ten monitors providing up-to-the-second financial data. Although this can lead to the highest returns, it’s not ideal for optimal health. Do some form of exercise everyday so you can approach your work calmly and stress-free? A trader should strive for at least seven hours of sleep each night so exhaustion doesn’t lead to a slip-up. You should do your best to cook healthy meals so you don’t spend the day snacking at your desk. The better you take care of your body, the better you can think through financial decisions each day.
There is no secret ingredient to successful day trading but if you keep these three tips in mind, you will at least go into it with an understanding of what trading entails.