When you decide you want to get involved with the stock market, there’s more than one way for you to go about it. Two of the most popular approaches, which pretty much fall at opposite ends of the spectrum of options, are trading and long-term investing. Determining which approach is right for you is going to depend on a number of factors. Knowing the differences between trading and investing will help you decide which stock market approach is a better fit for your goals, interests, and strengths. Check out our breakdown of the two concepts below.
Misconception and assumption plague every industry and job title. Until you do the work yourself or hear from someone who does, you might not even realize that what you think you know about a profession is misguided. No exception to the rule, there are plenty of unfounded beliefs about day trading perpetuated by those who don’t really understand it.
If you’re thinking about becoming a day trader sometime soon, you should begin by learning about what your days will be like once you start trading day in and day out. There are a lot of people who are under the impression that day trading is one big adrenaline rush filled with exciting moments throughout the course of an average day. There will be some days that are like this, but more often than not, your days are going to be relatively ordinary when you’re a day trader. And that’s not necessarily a bad thing!
Does the idea of spending your days buying and selling stocks in an effort to turn a profit excite you? If so, you might be thinking about trying to become a day trader. Thanks to the rise of the internet, more and more day traders have been popping up over the last 20 years or so with varying degrees of success.
If you’d like to try it, here are the steps you’ll need to take to turn yourself into a day trader:
Put together enough funding to start your day trading operation
In order to become a day trader, you’re obviously going to need some money to start off with. This money should not be money that you’ve set aside for your child’s college fund or for the house you and your spouse have been saving up for. You don’t necessarily need tens of thousands of dollars, but you will need enough money to sustain your operation when you begin buying and selling stocks regularly.
Do your homework before you start buying and selling stocks on a whim
There are some people who are under the impression that day trading is easy. They think traders spend a few hours buying and selling stocks and the rest of the day goofing off. But this couldn’t be further from the truth! The bulk of the work that you’ll do as a day trader will involve researching stocks before buying and selling them and monitoring stock market patterns. This will consume much of your time and will inform each and every decision you make.
Invest in day trading software that’ll allow you to chart stocks and buy and sell them
To buy or sell stocks, you’ll need to invest in day trading software that will make it possible. Research your software options before selecting the software that will work best for your specific needs. You’ll also need to find an online broker that specializes in assisting day traders.
Start off slow and avoid taking too many risks at first
When you first start day trading, you might be tempted to take all kinds of risks in an effort to make a big splash and prove that you’re legit. This is the wrong approach to take. Instead, you should start off slow and learn about how day trading works. There will be plenty of time later to get more aggressive once you’ve learned the ropes.
New day traders will also need to keep taxes in mind as they work to get their feet wet. Trader’s Accounting can set you up with trader tax preparation services and answer any tax questions you might have with regards to day trading. Contact us today if you’re launching a career as a day trader!