So You Think You Can Become A Day Trader?

Why do you want to day trade?

Why do you want to day trade?

First of all what is it you want to achieve by becoming a day trader?. This has become one of the most demanding professions there. So if money is your only motivation then there are surly a lot of easier options to pursue than trading. Most people that take the plunge and start day trading can't turn a profit and those who make a small profit gets wiped out by trading fees.

Furthermore do not get into trading because you think its because it will be a job filled with exciting moves pushing significant amounts of money around while your adrenaline pumps. Those who trade successfully for a living have simply found a way to exploit an edge in the market and proceed to do this over and over. At that point day trading becomes profitable but rather mundane routine work.

Why day trading is becoming harder

You must also remember that day trading is a sub zero game. You need to find a competitive edge. And that is hard when you consider that your competition aren't mostly made up of other individuals such as yourself but consists of professional trading firms with unlimited resources. A major reason why day trading is becoming harder is the explosion of what is called "high-frequency trading". High frequency trading uses algorithmic computer programs to exploit trading opportunities that may exist for only a fraction of a second. They move in and out of such positions several times a day to capture small profits on each unit for hundreds of thousands of shares in each trade. In 2010 high frequency trading accounted for 70 % of all equity trades made in the US and this new form of trading have driven a lot of conventional day trading firms out of business.

How do you compete in this environment?

So do you think you have what it takes to compete in this market?. Even though its harder its not impossible if you have the drive and passion for trading. Its time to get serious and here are some tips.

To have a chance of being successful you need to dedicate yourself to learning everything about the fundamentals of trading. Stay away from "systems" and read solid books about this field.

Open up a demo account and start to practice your trading skills. Remember to treat your demo account as if it was real money. Trade everyday based off daily analysis and track your results in a blog. Set tangible goals for yourself, for example that you will start a small live account after four positive months of demo trading.

Integrate trading into your regular life. Start with high time frames and work your way down and not the other way around because if you do you will spend all your time on charts and won't see any results for ages. Learn to make solid income by making a smaller amount of quality trades each week.

by: Chris Tancredo

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