Five crucial things to consider before you start day trading online
Online trading has experienced a boom during the pandemic, as many people looked for a way to make money from home.
Unlike a lot of trade exchanges, day trading presents a unique advantage for millions of aspiring investors: it doesn’t require a lot of money to get started.
During the pandemic, experts believed that day trading could help replace a lost income. People are attracted by the promise of big gains, so small and manageable day trading operations may make them feel more confident about avoiding big losses.
In reality, the explosion in day trading can still drive significant losses for new inventors who lack the trading maturity and knowledge to predict trends.
In a post-pandemic environment, people still recognize the role of day trading as a way to build a secondary source of income. In an economy with increasing living and housing costs, it makes sense to look at day trading as an income-generating side hustle. However, if you are new to day trading, you want to set your expectations and priorities right.
1) Consider taking professional lessons
It may seem like a waste of your time when there are plenty of platforms where you could learn on the go, but day trading courses can teach your trading best practices, methods, and tips. Some courses can also put you in touch with professional and experienced traders who are available for mentorship.
Who should be considering courses?
- Any aspiring trader who lacks experience
- Anybody who needs to learn about trading strategies
- Any trader who wants to create their algorithms for long-term use
- Anybody who wants to learn to trade either for themselves or others
Courses can help build a network to exchange trading knowledge, get familiar with real-time trading via simulators, and even learn to recognize trends and patterns. Trading psychology is a useful tool to learn as it can avoid making bad decisions in the heat of the moment!
2) Seek a platform that does what you need
Not everybody will trade in the same way or with the same intent. If you wish to diversify your portfolio with international stocks, it could be a good idea to look for a European stock broker who can give you access to a different market.
On the other hand, if you prefer to focus on the US market and sell your services as a day trader to a handful of customers, you may prefer a platform built around US stocks and facilities.
It is essential to compare platforms before you make your choice. With plenty of different solutions to pick from, day traders need to check:
- Whether the platform provides assistance (via chat lines, email, phone number)
- How often they can withdraw their gains
- How easy it is to deposit funds
- Whether a fee is associated with a deposit or withdrawal and how much it is
- Time to execute commands
- Whether there are restrictions on algorithmic trading
3) Understand crypto assets
As a day trader, you do not just trade stocks. You can also trade using crypto assets, such as crypto tokens. Crypto assets act as currencies to fund digital trade wallets. Essentially, a trader must purchase crypto assets first before making digital asset purchases.
Getting familiar with how and when to use crypto tokens can offer new opportunities as a day trader:
- You can invest in cryptocurrencies (such as Bitcoin, Ethereum, etc.)
- You can use the crypto assets to purchase NFTs (once converted into cryptocurrencies)
- You can use them to invest in other crypto projects, such as buying shares in startups that use crypto investments for raising funds
4) What about FOREX?
FOREX stands for foreign exchange and refers to the market for actual currencies such as $, £, or even €. FOREX is the world’s largest and most liquid asset market, with a record daily trading volume of $6.6 trillion. The supply and demand on the market are greatly affected by geopolitical risks, economic strength, tourism, trade flows, interest rates, etc.
FOREX traders need to develop a strong strategy, remain on top of their numbers, and cultivate emotional equilibrium to maintain their trading position.
5) How much can you expect to make with day trading?
There is no mystery. How much you can win depends on how much you are ready to invest in the first place. Very few lucky traders can make a big gain without taking risks. To win a significant amount with day trading, you must carefully consider your approach to risk-taking. How much risk you are comfortable taking will affect your wins and losses.
Is day trading the right strategy for you? Trading requires an in-depth understanding and knowledge of markets, nerves of steel, and a reliable platform. Not everyone has the right mindset to become a successful trader, but the only way of knowing is to join a class and discover by yourself with a simulator.