We would be lying to ourselves if we say that we have not thought about quitting our jobs and becoming our own boss one day. Well, becoming a day trader is just the thing for such people, all you need to do is track stocks and make money. While this is what many people assume and know, let’s understand more about the profession and how can you become a day trader.
What does a day trader do?
This is something you must already be aware of; a day trader actively indulges himself in selling and buying securities during the day while making sure that none of these positions are kept open by the end of the day. Day traders are different from other active traders who may hold similar securities for more than a day and even longer. The basic characteristic of a day trader is that he predicts trends to make money on a daily basis and are not investment-driven.
Form a self-assessment
As attractive as day trader job may sound, there are certain things that you must keep in mind before quitting your oil job and becoming a full-time day trader. To be exact, you should ask yourself things like, are you comfortable with your mathematical analysis skills, your knowledge of behavioral psychology and financial terms. A day trader should have the following skills:
- Endless commitment
- Risk-taking capabilities
- Ability to learn
- No days off
- long working hours
Understanding the securities
It is important to understand that the securities market is more comprehensive now than ever. Mutual Funds, ETFs, options, futures, and stocks are all traded differently and are affected by different factors. So, it is important to rationalize your knowledge in this particular field and decide your forte to make the best out of that knowledge.
As a day trader depends on the markets for his living, he should have all the necessary information about how the markets work and other basic information. You should equip yourself with the knowledge of things like allowable trade instruments, margin requirements, the impact of different events, trading hours, and exchange holidays.
No matter how much information and knowledge you have gained before joining your job, you must understand that without experience you will suffer a few losses and for this reason, it is important to start small and not go all out with your gathered capital and learn the markets before expanding.