A day trader is a business person who actively buys and sells securities several times within a day of doing business. However, the business person does not have open positions for the next day. All of the business positions taken during the day of trade are squared on that day. Furthermore, most of the day traders prefer using leverage to increase their chances of being in the business exposure. Therefore, there are several steps that can make a business person become a day trader. These steps involve carrying out an honest self-assessment, arrangement of sufficient capital, and understanding of the market.
Conducting an honest self-assessment
A thriving trade during the day requires the combination of skills, knowledge, commitment to lifestyle, and traits. An aspiring day trader should be well adept with financial knowledge and mathematical analysis. Similarly, the business person should have a stomach that can contain the entrepreneurship world.
Arrangement of sufficient capital
In any business set up, profit generation is not always that consistence. Extended and intermittent losses are part of a day trade game. Therefore, to handle the risks that are associated with losses, an aspiring day trader must have some extra cushioning capital. Also, the available capital will depend on the frequency of doing trade, costs, and the selected trading plan.
Understand the market
A day trader needs to have a solid knowledge of the functionality of the market. This involves the understanding of the simple details such as exchange trading hours. Additionally, the trader is required to understand some complex aspects of the market such as tradable instruments, margin requirements, and impact of new events.
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