Have you always coveted an exciting life that is full of new challenges and opportunities? Then what you need is a look at the life of a day trader.
A day trader deals with financial markets through buying and selling forex, futures, and other forms of securities. There are different types of day traders ranging from the smaller ones, who believe in low-risk investments and typically operate from home offices. Then, there are the more prominent institutional players, who are responsible for moving hundreds of thousands to millions of dollars’ worth of contracts and shares during each session.
Do you need formal training to become a day trader?
One of the most significant caveats of working as a day trader from your home is that no one is there to tell you when to begin trading and when to call it a day. The inability to read the market signs and not picking the right times to trade are the two biggest reasons today’s day traders fail to reach the potential profits, which is why some amount of formal training from the experts of the market as well as hands-on training in trading are necessary for every new day trader. To hone your trading skills and the ability to read market conditions, you need a reliable trading coach beside you. To learn more about affordable training in day trading, visit Trade Pro Academy.
When does the typical day begin for the day trader?
A primary reason people jump careers to become day traders is the opportunity to take charge of their own lives. Depending on your exact location and the market you participate in, you could be looking at a very early day or the freedom to wake up whenever you please.
For example, the hour before the US stock and future market opens and the first hour of a trading day typically have the best opportunities for the day trader. Therefore, residents of the Eastern Time should be up and armed by at least 8:30 am every day for making the best of those chances.
On the other hand, if a day trader exclusively trades in the forex market, he or she might be able to access multiple trading opportunities throughout the day. The early hours of the US stock and futures market coincide with the US companies and banks open for businesses. The London market and banks are also open for business at that hour. That makes the early hours before the market time and the first two hours the best window of trading for the day traders.
However, it is essential to remember not to trade during the afternoon hours during lunch since the pay-offs are too insignificant for the effort put in by the trader. The time between 2:00 pm and 4:00 pm EST are particularly lucrative among day traders. These two hours are not only convenient for trading, but they also witness high market volatility that might bear the promise of significantly high returns.
What should you do to become a successful day trader?
One question that almost all new traders ask is, “What do successful day traders do every day?” In reality, everyone has their own trading styles, and each person has a routine they preferably stick to. If you are thinking about beginning trading in the early-bird market, here’s what you need to do –
- Never work on an empty stomach. That is indeed the first rule every early day trader follows ardently. You are more likely to make bad decisions and mistakes when you are hungry or waiting for breakfast.
- Once you complete refueling, you should revise your strategies in your mind. Do you have any pressing trading-related issues? In case you do, plan on handling them today! Draft a plan with actionable insights and see if the implementation leads to the solution.
- Always remember to check your trading account health before you begin your day’s trade. Experts recommend risking a maximum of 2% of your account balance. If you are new, always test the waters by investing 1% or less.
- Be sure to check the economic calendar. Once you note the major events during the next part of the day, you should be able to predict when to pull out of the market. Remember to exit at least 3 minutes before the major event of the day.
- Always check the working of your trading platform and ensure that the quotes are streaming while you are online.
How to improve your skills as a day trader?
Your responsibility does not end with exiting the market. You need to keep detailed notes on your performance by the hour. The easiest way to keep track of the trade levels, profits and losses are by taking a screenshot of the trading chart for the particular day.
Here’s what you should note carefully –
- The number of hours you have traded actively.
- The total number of trades for the day.
- The number of winning trades and the detailed pips/cents of each winning trade.
- The number of losing trades and the detailed pips of each one.
- The total profit or loss of the entire day in pips.
Always save the day’s screenshot and notes in separate folders according to the date. Take a backup of these folders in your cloud or Google Drive for remote access or emergencies.
These notes are imperative for every novice and experienced day trader if they want to improve their skillset. Take a comprehensive review of your performance at the end of the month. You can use live tracking software for evaluating your performance. Many new traders find real-time tracking, and end-of-month evaluation reports incredibly helpful for performance reviews. It is the only way for day traders to develop the market instinct.
It is not uncommon for new traders to take five to six months of practice to open their first trading account that generates a steady flow of profit.
Why do people think that day trading is challenging?
The most significant responsibility of a day trader is to keep tabs on his or her own performance throughout the day and review their performance at the end of each month. Since there is no higher authority, which can hold you accountable for your mistakes or losses, it is only up to you to make the necessary improvements in your trading style. Learning the strategies of trading take time and experience. Even with a certified course to provide you a boost, you will need hands-on experience to succeed as a day trader in life.