If you have come this far, congratulations! You can now start day trading SLOWLY!
To me, day trading is a business like any other. The reason why I think most businesses fail when they start is because of lack of preparation; not because of a lack of intelligence or potential.
Before you start day trading, you should have a desire to learn, good training (make sure to read my trading e-book when you test drive the trading simulator – and maybe register for free online training), the proper tools, an open mind, discipline, and conviction that you can do it.
Forget intelligence. It can easily lead you to believe that you are God’s gift to man and that you are destined to succeed. Well, a feeling of grandiose and overconfidence will probably only lead to frustration and failure in day trading.
You can learn day trading if you really want to, but get prepared first.
In summary, before you start day trading you must know some important day trading facts like, the account size requirement (which depends on the particular broker you use) and that you need to use a direct-access broker to obtain the best results (you can request a free simulator by clicking here before you risk a penny trading live – then, go to the section to set up a live account only when you’re ready).
You must also have or get a computer for day trading. This trading computer is where the trading software will be installed and run. The trading computer should have a high-speed Internet connection like DSL or Cable Modem (or a T1 connection), an antivirus program, a firewall, and a UPS back-up system.
After getting your computer ready, you should proceed to learn some basic information on day trading and investing like “bid” and “ask” and types of orders like market, limit, and stop orders. Once you have a solid grasp of these things you need to become very familiar with additional trading concepts like level II, Electronic Communication Networks (ECN’s), market makers, order routing and technical analysis (remember that you may not need to learn some of these things if you want to day trade currencies).
The best way to become familiar with these concepts is while learning how to use the direct-access trading software (like RealTick) that your broker provides. Then you are ready to open an account with a direct-access broker that provides a trading platform like RealTick (or a currency broker). From that point on, you should do paper trading with the trading software in simulator mode (demo) until you are ready to trade with real money. The final step is to start day trading!
After having gone through these seven steps that I have described, you should be on your way to becoming a more effective day trader. Best of luck and God bless you! If you are ready to start day trading in a demo environment, click here to download a free 30-day currency trading simulator.
If you have not read the new section on trading currencies, click here to do so now.