Firstly, the term Day Trader might not be entirely accurate, but it’s what most people refer to it as. Pure day trading means a trader buys and sells stocks and other investments, ending the day with in cash with no open positions. If positions are held overnight of for several days then this is referred to as a swing trade. Most day traders will actually use both approaches and well develop their own style the longer they work at trading.
How To Become a Day Trader
It’s important to understand the markets and know what tools are available in order to make sure you get off to the best start possible. If you’re planning on working for yourself, you’ll need a professional software platform that includes real-time news and data feeds – That’s essential. You’ll also need a high speed, reliable internet connection and a set up that includes at least 2 monitors. Although most traders will have 4-6!
If you’re working for someone else, this will be provided for you.
You will need an in-depth understanding of stocks and the market while understanding technical analysis and chart patterns, trading volumes and price movements.
Education & Training
There are many business and finance bachelor degree’s available and many companies will require you to be educated up to this level if you wish to work as a trader for them. Even if you’re planning on working for yourself, this level of education will give you an excellent foundation on which to develop your trading knowledge.
Trading your own private account only requires you to work with a securities firm to place your orders. If you want to work for a trading firm, the minimum requirements generally include passing the Financial Industry Regulatory Authority Series 7 test for your general securities representative license
There are several options available to learn about financial markets and how to become a successful trader. There are a lot of blogs out there that promise to take you through the process step-by-step, however these can involve a monthly subscription and it’s highly recommended that you gain your own basic understanding first.
There are some free courses available online that cover a lot, so you need to be taking advantage of these. These courses include:
- Financial Evaluation and Strategy: Investments – from the University of Illinois
Trading basics – technical analysis and charts – Via Udemy
There are of course paid courses as well, such as:
- Making financial decisions – A 4 part course from the University of Michigan.
Professional Options Trading, Simplified – Via Udemy
Books are another must, not only to gain a specific understanding of day trading, but investment as a whole. The following are must reads;
- How to Make Money in Stocks by William O’Neil
- Trade Your Way to Financial Freedom by Van Tharp
- The Intelligent Investor: The Definitive Book on Value Investing by Benjamin Graham
- How to Day Trade: A Detailed Guide to Day Trading Strategies, Risk Management, and Trader Psychology by Ross Cameron
- A Beginner’s Guide to Day Trading Online by Toni Turner
- How To Day Trade Stocks For Profit by Harvey Walsh
Now with all the knowledge you’ve gained from taking courses and reading books, it’s time to put it into practice. First with no risk. There are simulators designed to allow future traders to experiment and understand how the market works. This gives you a chance to try out some strategies and gain a working understanding of day-trading. Some of the best simulators include:
Here’s a free class detailing how to become a day trader:
The duties and responsibilities of a day trader will vary on whether you’re working for yourself or someone else. However, common duties include:
- Gathering information and analysing the market
- Carrying out detailed data analysis and valuation
- Proving in-depth market reports
- Identifying issues affecting clients
- Developing client relationships and presenting ideas to clients
- Executing trades and securing deals with new clients
- Keeping market-making traders informed of relevant issues with their customers and products
- Obtaining market prices from market-making traders and executing trades
A day traders job is a fast-paced and exciting one. Learning to identify good trades and working to get the best deal for your clients will allow you to progress the career ladder to work with larger clients and manage larger funds.
If you’re working for yourself, the potential for how far you can go is endless. However, you need to constantly develop your understanding of the markets and keep your eye on real world events. There will be ups and downs but experience will allow you to know how to make better trades.
And that’s how to become a day trader. Use this information to start your new career path!