When you think of stock trading, you may have an image of sitting down with a stock broker, taking their advice and hoping for the best over the long haul. And while that’s certainly one way to look at things, day trading is yet another. A hazardous and ambitious task, the challenge of buying and selling stocks in the same day, sometimes multiple times in the same day, is growing in popularity. With the commonplace availability of high speed internet, anyone can now jump into the fray. However, it’s important to find out more details before you invest your hard earned money into this risky venture.
FORMULATE A GENUINE BUSINESS PLAN
Just like any other business, either full-time or part-time, day trading deserves a business plan. Here, you should compile a complete list of the equipment needed to get started and sustain your venture, a list of training courses to further your knowledge beyond what you already know and a realistic budget.
COUNT ON LOSSES
While of course you want to be optimistic, you also have to be realistic. There will be losses. The smart investor is ready for this and never puts all his eggs in one basket. A daytrader needs to be ready for unexpected dips in the market and unexplained turnarounds in pricing at the turn of a dime. You’ve got to be in it for the long haul, not just the quick dollar.
PRACTICE MAKES PERFECT
How many times have you played Monopoly and said, “If only this were real money.”? Well, that’s how it is with day trading. Before you start using your own money, practice with fake money. Accounts can be set up that allow you to practice your stock buying and track how well you’re doing or not doing. This allows you to hone your skills and get ready for the big day when you invest your own money.
STICK TO THE PLAN
Don’t panic when you stock starts to fall, selling before you get to your set price. You made a plan and should stick with it. It’s easy to let panic set in and have your emotions rule the day. To be successful, make a legitimate, well-thought out plan and stick to it.