How To Day-Trade: The Life of a Financial Cheetah

 The cheetah is the fastest land mammal on earth, running at speeds that put some poorly maintained rolling Detroit iron to shame. In the world of stock trading and finances in general, the day trader is the cheetah, making his moves with cat like reflexes and mind blowing speed, leaving the trend trader behind in abject bewilderment. Knowing how to day trade can be taught, but having the inborn ability to pick the right stocks and know when to move them is probably something you are either born with or not.

 Of course, it goes without saying that knowing how to day trade involves knowing the many types of trading, and the advantages and disadvantages of each type. It also helps to understand that the term “day trader” should not be meant to imply that these traders just fly by the seat of their pants, making hap hazard, willy-nilly trades without careful consideration. There is a lot of knowledge and finesse that goes into knowing how to day trade, so, you can make good trades and succeed, or you can make a few bad trades, lose all of your money, and no longer make trades at all.

To get started as a day trader, it is probably advisable that you be familiar with the stock market in general, preferably from working closely with a broker. Begin by making “on paper only” trades, and tracking these pretend trades for performance. Know the ins and outs of the market in general before striking out on your own. Know the day trader regulations, including how to calculate day trade buying power (DTBP) and what the new minimum equity requirements are for day traders. Know which market you will trade on, and which is the most amenable to day trading in general. Also know which financial instrument (stocks, commodities, futures, currency, etc.) that you plan to trade, some of which are best dealt with by the day trader, and others are better off being handled on the more traditional market. Will you be using day trader software, and if so, have you investigated which program best suits your needs and trading level?

 The life of the day trader can be relatively sedate, or it can turn into a full blown chaotic windstorm in the course of a few hours on any given trading day. Economic news pouring out of Washington may cause an onslaught of trading activity in Japan that will affect your every trade. You must be able to roll with the punches, know your financial limits and play to your own strengths. If you have the know-how and the nerves, being a day trader can net you huge, fast returns. But, in life, there is the knowing how to and the knowing why you do it. Knowing how to day trade might seem simple to those suited to the career, but they might have more problems answering the why.