Day Trading Basics and Tips

Time Investment

Day trading isn’t a get-rich-quick scheme, nor is it something that takes years to gain consistency. Expect to spend six months to a year honing your skills and practicing a strategy before you become comfortable with it and are ready to risk your own capital using it.

Day Trading Styles

There are a number of day trading styles. Some traders are very active, catching small price movements with large position sizes. These types of traders are called scalpers. They often make dozens of trades a day.

Capital Requirements

Different markets require different amounts of capital to day trade. Stocks are popular, but also the most capital intensive. If you want to day trade stocks in the U.S., the absolute minimum you need is $25,000. And you’ll actually need more because you need to keep your balance above $25,000. Starting with $30,000 or more is recommended. You can utilize up to 4:1 leverage on day trades.4 Therefore, a $30,000 deposit allows a day trader to make bets with up to $120,000.

Day Trading Markets

If you have limited capital, forex trading may be your only choice because of its low minimum initial outlay. If you have a good deal of money to trade with, you can figure out whether you’d prefer to trade 1) stocks with at least relatively high volume and volatility or 2) futures — contracts that require the buying or selling of a certain amount of an asset, such as gold, crude oil, or an index of stocks, during a specific time frame.

Hardware and Software Requirements

Day trading requires a computer and reliable, high-speed internet access. You might want to have more than one monitor to make it easier to keep tabs on multiple trading charts. You should also have a mobile phone with a good data plan handy in case you ever lose your internet connection.

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