In the financial market to trade means to buy or sell financial instruments like stocks, currencies and more. One of the most popular styles of trading is called day trading. It is called day trading because a trader only trades within a particular trading day. At the end of the trading day, day traders usually do not hold any stocks or positions. They usually only hold a certain position from a few minutes to a few hours.
This means that day traders sit in front of their computers all day, buying and selling stocks hoping that the price will move in a favorable direction, be it up or down, depending on whether they are long or short. Before you can become a day trader and start trading, you should have the necessary screener software and knowledge on how to day trade online.
You’ll need three kinds of software – data software, charting software and trade execution software. Each of these bits of software has their own role to play in day trading. The data software will be responsible of providing the price feeds, charting software for chart prices and technical indicators and trade execution chart for the actual trading. Many brokers, and third party dealers, offer these three facets of day trading wrapped into one software package. This is ideal for day trading, because it allows you to use one interface to gather all of your information, and execute your trades.
Before getting the necessary software, you should set up an account with a broker and always keep the required minimum amount in it. For Pattern Day Trading (PDT) this minimum is $25,000. To trade on a margin, most brokers require a minimum of $2,000. This margin minimum will vary from broker to broker, as will their minimum funding requirements. The PDT minimum is standard across the industry.
Next, decide on the trading theory that will best work for you like Bollinger Bands, Mosaic Theory, moving averages, and other technical analysis techniques. Using a certain theory would help you determine the right time to buy or sell stocks. You should also keep yourself updated of business news so that you would be aware of the factors that can possibly affect the movement of a stock during the day.
Putting all of these factors together is really only the first step in learning how to become a day trader. Time and experience is another factor, and if you manage to survive your first few months in the difficult arena of day trading, you might consider yourself a real day trader.