If you are looking to get into stock trading, or day trading as it is popularly called, there are a couple of steps that you will need to take in order to maximize your success.
Step One: Get Set Up With a Great Broker-Dealer
The first step to becoming a successful stock trader is to create an account with an effective broker-dealer. Often, the cheaper brokers like Options House and Scottrade will not be good for day-trading purposes, as the opportunity cost of having extremely cheap trades is having those trades executed at a far slower rate than a different broker.
However, Tradeking may actually be one of the best investment platforms for day traders despite it’s extremely cheap stock trading commission fees. It provides an excellent research platform, and it is consistently rated as one of the best platforms on the market for fay traders.
Step Two: Learn the Technical Analysis Indicators
As a stock trader, your choices must be predicated on thorough research. Too many a hand has tried their hand at day trading only to have their money destroyed by emotional decision-making. Make no mistake, day trading is a career path founded in constant research, and it is one of the most stressful careers on the market.
You may want to start by learning the Relative Strength Indicator (RSI), Money Flow Index (MFI), and the Daily and Exponential Moving Averages (DMA an EMA). After that, you will want to move on to Elliot Wave Cycle Theory, Fibonnaci Theory, and other forms of higher-level technical analysis. Learning these technical indicators could take months, and mastering them will likely take years.
Step Three: Determine Your Working Location
Many stock traders make their money on a single trade each week or each month. In that trade, they may enter and exit the position in a space of a few minutes to a few seconds. Regardless, their decision making abilities must be uncanny and unhindered while they are attempting to make them. This requires having an excellent place of work to work from where you can focus well.
Many traders simply find it impossible to focus from their home, so it may be worth purchasing a trade desk spot where you can sit with other stock traders and exchange information throughout the day. This will help to keep you focused and quick-witted throughout the day.
Step Four: Purchase a Powerful Computer System
With stock trading, your computer system has to be top of the line. This is because you will need to be able to enter and exit trades with speed and accuracy. Your computer will need to have a strong RAM processing system, and it will also need to have an excellent Internet connection so that you don’t incur any losses as a result of slow Internet speeds.
Usually, most traders purchase a new computer every year or two years in order to stay up-to-speed with the latest technology. This allows them to become even more efficient in their day-to-day activities.
Day trading is an extremely difficult practice to become successful at. It requires great skill, ability to learn, willingness to learn, and utter dedication. It also requires that you be able to learn from mistakes rather than mull over errors constantly.
If you are thinking about trying stock trading, make sure that you consult with your financial advisor and other career traders to discuss their experience and your risk tolerance before commencing to trade stocks.