So, you’re thinking of diving into day trading? That’s awesome but if you're honest with yourself, it can feel a bit overwhelming at first. Between all the strategies, platforms and market lingo, it’s easy to get lost. But don’t stress, everyone starts somewhere and the key is to start smart.
Whether you're aiming to make it a side hustle or go full-time, these five powerful tips will help you build a solid foundation, avoid rookie mistakes and kick off your trading journey with more confidence and clarity.
Start with A Demo or Simulation Account
A smart way for you to engage with trading is through having a demo account on a simulation platform. What this means is that you'd essentially have a free account on a trading platform that allows you to make live or delayed market trades but instead of using actual funds, you're just using virtual currencies that are offered through the platform and don't cost you anything.
This is a great way for you to be able to see what it feels like to be a trader, to make moves and to call shots but without the pressures of a real trade account.
As with anything, you should first try something a few times in a demo setting before getting into the reality of it.
Find a Mentor or Community
Another nifty approach that you can take to start trading is by finding a mentor. These individuals can be crucial to a trader's stance and perspective on trading, as they've been around the block a few times and can give you real insight into what it means to be a trader. Through a mentorship program, you get to learn what someone with years of experience has done, which mistakes they've made and how they've learnt from them to become better traders. It's a smart tactic, as you essentially get years and years of experience, bundled up in a few months of talks.
Mentors are great to ask questions to. If you ever feel stuck or like you don't know what you're doing, you can reach out to your mentor because chances are, they've been in the same spot before.
You should also try to see if you can form part of a trading community. This can either be a group of people that your mentor introduces to you or people that you have found with the same trading interests as you. Here you can exchange information and lessons learnt, so that you all become better together.
Research the Assets You're Interested in
An additional tip to take with you is picking the asset you want to invest in. The truth of the matter is that there are many different types of assets and commodities you can trade in, in this digital age. The piece of advice that you need to take with you here is to not get confused amongst all the blur and options but rather, to look at the one singular asset that speaks most to you and go down this route.
By picking one asset, you put yourself in a better position to trade because you're clued up about one particular commodity. This means that you can ignore the copious amounts of news that come out about other assets and just focus on the economic news that is relevant to the asset you chose.
Create a Routine with Trade Journaling and Taking Breaks
A top tip that a lot of younger traders ignore and only see the power in later in their trading careers is creating a schedule routine. There is nothing more important than having a set list of what you're willing, capable and able to do in terms of trading daily. If you are still a beginner, chances are that you're not in the position to set aside entire chunks of the day to trading. Routine then becomes even more important, as you have to find the hour or two a day or every week to see what you can learn.
You should also create a routine through trade journaling and taking breaks. You must write down what you've learnt after every trading session. You might think that you'll remember it all but writing it down helps consolidate the information and it also means that you have something to look back at when you need it.
Additionally, taking breaks is crucial. It can be super tiring to learn something new, which means that your brain and body need consistent breaks so that you can retain all the information. There is no point in pushing all-nighters because you won't be able to get that short-term memory into your long-term memory. You have to take breaks and go at it slowly.
Master the Balance Between Knowledge and Emotions
Last but certainly not least is the notion of finding balance between knowledge and emotions. A lot of people think that trading is purely analytical but the best traders will tell you that there is also emotion linked with it. There is a certain gut feeling you get about some trades, just as there is a feeling of 'stop' or 'start' when you trade. This is half analytical but half emotional and as you become a more experienced trader, you will be able to find a balance between these two.