More and more I hear people asking me how to get started as day trader. I’m not surprised there is so much interest in it. Day trading has developed quite the reputation as a millionaire maker. It’s sort of the starter kit for breaking into a lucrative financial career, and it has been made way more accessible by the technological advancements of the last fifteen years. So I do agree it’s a great place to start.
That said, day trading can also be extremely risky. I like to make sure people understand the level of the risk before they dive in. In particular, there are some very complicated strategies used by some day trader that involve the use of algorithms, custom software, intense minute-by-minute price watching, and playing on the mechanics of the trading system itself. These strategies can be very confusing for someone new and they can lead to extremely high losses early on.
That’s why my preferred strategy for new traders is to suggest they simply watch and try to predict the trends. If they take a week and watch prices every day, they can write down trades that they would make based on the price trends. Then at the end of the day they can look at their record and see whether they were making successful or unsuccessful judgment calls on the price trends. This is an easy way to get acculturated without investing too much or losing a lot of capital.
I think it’s the best way to start off.
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