Did you know that you can make money in any market? Even when stocks are going down, there is always that potential that a day trade could land you thousands of dollars. For example, just recall the GameStop fiasco that set the financial world on fire. Stocks and trades are just another way to make money work for you, but you have to be wise and ready to trade without fear.
There will be wins, there will be losses, but don’t panic. It takes time and investing research into stocks and how to get them to work for you. If you are just starting out and need the first few steps, don’t worry, we’re here to help! These five steps are going to get you ready for the day trade game.
- Use the Right Services
This cannot be said enough: you have to use a service that works with you, not against you. For example, if you are ready to go into more advanced trading, then Robinhood and Acorn aren’t going to be big options for you.
Robinhood is one of the top apps for portfolio management and for good reason. It is great for beginners because, while it isn’t a no risk investment, it is a low risk investment with multiple price points you can choose from. What sets Robinhood above most other investment applications is the fact that the interface is sleek and easy to understand, and there isn’t a commission fee.
Finally, we have TD Ameritrade which is a personal favorite. The best way to look at TDA is that it puts the stock market in your hands. Like several other trading applications, there are how-to videos but TD Ameritrade goes above and beyond with lessons on the stock market, the app, and more.
- Experiment to Understand
From personal experience, one of the best ways to begin investing is to experiment. Go with low dollar stocks or even penny stocks. This lets you watch how the stock market circulates, rises, falls, crashes, and rises again. Rather than playing with exorbitant amounts of money, start with $10 so that you can comfortably work with the funds.
Think about it: is it easier to spend $100 without a guaranteed return or $10? More than likely, you will make the $10 back pretty easily: there’s no greater teacher than experience through experimentation and preparation. One thing that is also handy is making sure you have your notifications on your phone so that you can easily handle alerts from your portfolio management applications (Acorn, Robinhood, etc.).
- Don’t Work From Fear
Every major options and stocks trader will tell you: you cannot operate your investment portfolio from a place of fear and insecurity. Part of day trading is researching and having confidence in what you are doing.
There is so much to trading that it is very difficult not to be overwhelmed and not to approach things with some fear. This is where it is important to be aware of what your risk limits are. If it scares you to spend more than twenty dollars on an investment, then you probably shouldn’t be working in day trading.
- Set a Budget
This is an absolutely unavoidable and integral step to day trading.
You must set a budget for yourself.
That might seem like a ‘no duh’ moment, however some people dive into day trading without setting a budget and they also directly link their card to the purchases that they make. This is a big no no. With the ease of access with most accounts, it is dangerous to connect your card directly to your purchases instead of working on a strict transfer-money-when-needed strategy.
A budget will keep you honest, on track, and ensure that you aren’t creating issues for your financial security. When you set your budget, consider the following:
- How much do you make a month?
- How many expenses do you have a month?
- What part of your current budget could spare a few dollars to the investment budget?
These are great questions to help you figure out what you want your investment budget to be.
- Set Your Sell Points
This last point is probably the easiest to work with. On each stock you own, most apps will let you set a notification for when a specific stock reaches a price point. One of the most common day trading suggestions is to set a notification that tells you when your stock has made 10% on its original purchase price. Slowly but surely, you’ll build your portfolio this way!
Day trading is a great way to be more familiar with the stock market. No matter how you decide to trade, remember to budget, be fearless but wise, use resources that work for you, and don’t forget to watch those sell points!