Are you thinking about getting involved in day trading? If so, you’ve probably already asked the inevitable questions, like how much money can you realistically earn, what are the downsides, what kind of software is available to help, how do traders limit risk, and many more. The good news is that many engage in day trading. The keys to success are choosing a market niche that interests you, working with a reliable broker, choosing a software platform that gets the job done, and knowing how to do the day-to-day chores that will contribute to your long-term success. That’s a lot to think about, but here are some of the main aspects to focus on as you begin.
Understand How Software Can Help
If you choose forex as your preferred day trading niche, you’ll inevitably connect with a broker and choose a software package. Most firms offer either a proprietary setup or they license something like MT4 (MetaTrader 4), one of the most popular forex ETPs (electronic trading platforms) in existence. It’s been around since 2005, is constantly upgraded, and lets you see live streaming prices, technical charts, and much else. Be sure to test drive any software package before deciding to make it your go-to assistant for order placement, market analysis, and account management. That’s because software is an all-important aspect of the day trading lifestyle. What you end up using will invariably shape your experience for better or worse.
Choose a Niche You Enjoy
Until you develop high-level skills, it’s important to specialize in just one area of trading. Many newcomers opt for forex because of the low cost of entry and less restrictive rules compared to stocks and traditional securities. What will your day be like if you choose to buy and sell foreign exchange currency pairs? For starters, it’s safe to say that most forex beginners who work 20 days per month tend to execute approximately four to six trades per session. That’s just an estimate, but it is within the comfort zone of many beginners. But you’ll spend most of your time watching, tracking, tracing, and analyzing the ups and downs of your favorite forex pairs. So, while it might not seem like a heavy load to do five round-trip transactions in a typical session, the mental stress can build up, so don’t expect to reach that level of activity for a few months.
The Broker Makes a Difference
Remember that whenever you run into problems with software, your own computer’s glitches, news feeds, or tricky order placement, the broker has your back. You need to have a reliable partner in your new enterprise, particularly as you learn the ropes. Most of your working hours during the first few months will be stressful. You will often seek out assistance from the brokerage reps. That’s why it’s essential to spend time researching various brokers in the market niche you choose. Some specialize and some don’t. If you decide on foreign exchange, make sure you team up with a company that is reliable and has a solid reputation in the industry.