Day trading can genuinely provide you with an invigorating, exciting and profitable career. It isn’t for the faint of heart or easily dissuaded – it is laden with risk. You can just as quickly lose money as gain it.
If you’ve only seen the positive side of day trading, you’re probably not alone.
These gurus, savants and influencers aren’t as forthcoming with their bad days. Trading can be an emotional rollercoaster and you have to be prepared for that.
If you’ve determined to buy a ticket and get started with the challenge of trading, you need to know what you are doing and where to go to get the best, tried and tested advice.
For this reason, we’ve detailed all of the ins-and-outs of getting started with day trading in one simple, accessible article.
Practice
This is arguably the most important piece of advice I can give you. Trading apps like Trading 212 give you the opportunity to start your trading journey with a virtual £50,000 investment.
With such a vast amount of money, it can be tempting to pile in on extremely risky plays with tremendous upside. The potential is sparkling and hard to ignore.
However, you’ll get so much more out of the experience by treating the £50,000 as if it was your own money. When you accrue the capital to make a start day trading, you no longer have the opportunity to make mistakes. Any misguided attempt at doubling your profits can signal the end of your trading career before it’s even had the chance to start.
A practice account allows you to rebound from your mistakes. If you get duped into investing into a seemingly promising company – or in your hurry to get the best possible price you accidentally buy the wrong share ( this does happen – several different shares can have the same name across different markets and misnomer shares skyrocket in value all the time so common is this mistake) you can always start again. The fallout from a loss can be devastating. In this way, you are protecting your financial and mental health.
All the theory, knowledge and expertise in the world isn’t a substitute for experience. That is why practicing your skills (without taking on any risk) is so vital.
Don’t fall for the promises of gurus
Don’t get sucked into the promises of so-called gurus online. Social media, forums and messenger services are rife with scammers selling potential victims on massive profits.
Pump and dump schemes are one of the easiest schemes to get sucked into. At first glance, it sounds good. Everyone makes money.
To explain it briefly, a group of people are encouraged to buy a particular share at a pre-arranged time. The goal being to inflate the value of the share and then sell it on at a profit. The harsh reality is that a select few of the group have bought it days or even weeks earlier. When the share price surges, they sell – making a profit but leaving the rest of the group holding now worthless shares.
Do your research
There’s no such thing as trading based on feel or instinct. Any trade you make should have some kind of reasoning. It could be an announcement from a political leader or it could be new industry regulations.
As well as the minute details that can cause movement in a share price, you also have to bear in mind the big picture context that propels movement in share prices.
The pandemic is the ultimate example.
Share prices globally tumbled to a record low. Since the worst of the pandemic has passed however, share prices have gradually recovered. Recognising this as an opportunity for investment is
Keeping a close eye on global news gives you an advantage. It puts you in the best possible position to act first on announcements that can shape the future of
Protect your profits
One of the very first lessons young traders learn is to protect your profits. It’s basically impossible to monitor share prices in real time and know when to bank any profits. Thankfully, automated stop loss orders can help protect your investments.
If a company announcement, financial causes the share price to plummet, stop loss orders will allow you to sell as soon as the price begins to crater.
Failing to put stop losses on all of your investments is the fastest way to lose all of your money. It has been the undoing of many budding day traders.
