UNITED STATES—You have decided to give day trading a go, but you do not have any background in it and are, understandably, worried about the potential losses. Day trading with Robinhood is becoming one of the most popular introductions to the business for millions, but it still requires a great deal of foresight and research. This article will provide several tips to help those with no prior investment experience learn how to day trade and, more importantly, how to start developing their investment education.
Start with the Basics
First and foremost, do you know what investing is? Besides giving money to someone or something and getting more back later, do you understand the economic principles behind investment and how it works? It’s important to start at the absolute ground-level so you are able to make the best possible decisions later on. Yes, there is always a risk when it comes to trading of any kind, but that doesn’t mean it’s a game of Russian Roulette. Your knowledge is going to be your most valuable asset in this line of work, and it is work. While you wait for your copy of “Investment for Dummies” to arrive in the mail, check out these resources:
- Investments for Beginners via NerdWallet.
- Investing in Stocks via Investopedia.
- Basic Economics for Stock Market Investors via Dummies.
- Learn the Laws
Day trading isn’t a financial free for all. You’re trading things fast, but that doesn’t mean there aren’t laws in place. Did you know there is a legal financial minimum capital of $25,000 to day trade stocks? There are regulations and practices that you must uphold at all time to remain in good standing and not break the law. Avoid just thinking an app or third-party will cover everything for you. For a no-risk venture into day trading, you can try a paper trading simulator to get a feel for how it all works. You’ll get first-hand experience managing a brokerage account and learn how to read and interpret data and test trading strategies before using any real money.
Learn from Pros
Head online and look for professionals on social media who run channels dedicated to helping aspiring day traders get off the ground. Avoid any scam-like content creators whose videos always culminate in prompting you to pay for some type of program. Instead, put your time into watching people discuss their experiences, mistakes and best tips for getting the most profit out of your day trading efforts. You should also read information from the U.S. Securities and Exchange Commission. The organization has an entire education website dedicated to helping investors continually develop their knowledge.
It will take time to educate yourself, and you shouldn’t rush the process. While you may be eager to start earning fast, you’re more likely to lose than gain anything if you charge forward without any real preparation. To give your future investments the greatest chance of prospering, make sure you build a good foundation and allow yourself to act with confidence.