Day trading can be a full-time or part-time venture whereby you make short term trades that last less than one day. While some day traders find success, the statistics say that only 10 percent of traders make a profit. It is important to know that while it is not easy to trade successfully and you certainly won’t get rich quick, it is possible to make money trading. Here we will look at whether day trading is right for you.
To become a successful day trader, you need to invest time in learning the skills, researching and planning. Day trading cannot be used as a get-rich-quick scheme. While some people may be lucky, most won’t. This means that you need to spend time researching everything there is to know about trading. You then need to start analyzing. Analyze your personality, do historical analysis and analyze the charts. Spend time writing down your goals and developing a trading strategy that suits those goals. You then need time to practice, practice, practice. While you are practicing, you need to be improving your strategy. Becoming a successful trader can take as long as two to five years. If you don’t have the time to commit, then day trading is not right for you.
The aim of day trading is to make money, but in order to make money, you need to have money to start with. This is known as capital and you cannot trade without sufficient capital. The amount of capital you need will depend on the market you choose to trade in. Stock trading requires a minimum of $25,000. The stock market offers leverage of 4:1 on day trades. Forex trading is possible with capital of as little as $500 and leverage of as much as 50:1 is available. However, using leverage of closer to 5:1 and having more capital is recommended.
This is a difficult area to discuss as income will vary widely between people and is dependent on many different factors. It will depend on your capital and how much time you can spend on your trading. The best way to get an idea of how much you could make day trading is to open a demo account and to actually trade. A demo account allows you to trade real trades without spending any actual money. If you do this for an extended period, such as six months to a year, you will have a clear picture of how much money you could make and whether day trading it right for your needs.
Whether day trading is right for your needs depends on many factors. Primarily, it depends on your goals and what you hope to achieve being a day trader. Once you have worked that out, you need to sit down and work out if you have the capital and the time to make that happen and whether, even with all these boxes checked, you will achieve your goals.