With hundreds of billions of dollars traded daily across the globe, the price of financial assets from currencies to commodities is always on the move.
Whether prices are rocketing upwards or plummeting downwards, traders can make a profit for themselves and their clients.
Do you think you have what it takes to make it in this high-stakes, non-stop carnival of cash? Let’s take a closer look at what you’ll need to succeed.
Step 1: Read Up – Really!
You do not need any formal qualifications or school certificates to become a day trader as long as you are using your own capital – all you need enough money to get started and nerves of steel.
Studying the different types of financial instrument you can buy and sell and the basics of how their respective markets work is the bare minimum you need to do to succeed. Despite what many people think, there are in fact discernible patterns and market moving events which you can discover and capitalize on.
Here are some of the basic instruments you can trade:
Currencies – USD, EUR, JPY, AUD and many other national currencies are traded on the global financial markets. Look out for central bank decisions and announcements as this is when most movement occurs.
Commodities – From cocoa grown on the mountainsides of Indonesia to raw steel mined in the deserts of Australia, commodities are for sale on the financial markets 24/7, 365. Commodity prices tend to go in cycles called bull and bear depending on supply and demand. Look out for major changes to economies like China and the USA for trading opportunities.
ETFs – For those who don’t want to buy actual commodity futures, ETFs are a great way to get a piece of the action. An ETF is a fund which reflects the price of the asset it is backed by. ETFs can be made up of commodities like coal and oil, currencies like USD or Yen, or stock indexes like the NYSE. You buy and sell them just like stocks.
Stocks – Stocks are probably the best known of all the financial instruments you can buy and sell, and allow you to own a little piece of a company for as long as you hold the stock certificate, which these days will likely be digital. If you don’t know much about buying stocks, Here’s how to buy stocks in Canada. You can profit from dividend payments if you want to hold long term, or buy low and sell high for faster, volume based trading. Of course, trading stocks can be somewhat of a dangerous game, and many investors prefer to make use of helpful market research before they start throwing their money into stocks. Research newsletters such as Stocktrades provide helpful trading tips and market trends in order to help people get the most from their investments.
Step 2: Find a Platform and a Reliable Intelligence Source
Once you’ve read up on the various things you can trade and decided on one or two to focus on, you’ll need a platform on which to buy and sell.
Long gone are the days when you picked up the phone and called your stock broker to place an order. These days you can buy and sell on the global financial markets with the click of a button, sitting in your home office, online.
Professional trading platforms are advertised all over the web, but it’s best to stick with the best-known and most-trusted. You could use:
Scott Trade – Great for buying and selling stocks in the USA. Budget pricing as low as $5 per trade.
Interactive Brokers – Full access to global financial markets from stocks and bonds to commodities and currencies. Features professional analysis tools and updates.
Trade Station – Access to hundreds of financial markets and a variety of instruments across the world. They have one of the best reputations around.
You’ll also need a reliable source of information. Speed is everything in trading and if you’re reading it in the Wall Street Journal or watching on CNBC, most of the action has likely already happened and thousands of trades will already have been placed on this event.
Professional trading terminals like those offered by Bloomberg can help you stay ahead of the curve and be the first to hear what’s going on.
If you want to practice before trading with real money, many of the above-mentioned trading platforms offer free practice accounts with tens of thousands of dollars in play money. This is a great way to test whether what you think you have learned in step 1 is valid or not.
Step 3: Trade Live!
Eventually, it’s time to stop playing around and trade for real.
Once you’ve learned the ropes and worked out the basics of what happens when certain events occur, it’s time to saddle up and ride for real. There are fortunes to be made, and also lost, for those who are willing to try their hand at trading.
You’ll very quickly figure out if this is the business for you as your theories will either be correct, and you will profit, or will be incorrect, and you will lose. Within a few months, you will know whether you’re going to succeed as a financial trader.
Pro-Tip: Trading is highly emotionally charged and the events surrounding them can cause humans to do irrational things. If you think you have a valid theory, place the trade and walk away. Do not watch the numbers on the screen intently as you often have to be willing to endure dips and short-term losses before your trade comes good. Determine in advance how much you are willing to lose, place the trade, and do not back down. You’ll be surprised that many trades which initially go the wrong way turn around and go in the direction you thought, eventually.
Step 4: Showcase your Success & Attract Clients
If you do have great success as a financial trader, it may be time to think about attracting clients and trading their capital for them. Note that it will almost certainly be a requirement that you have a license before doing this.
If you’re successful at trading, take screenshots, keep records of your best trades, and provide evidence. You can compile all of this into a video, put it together on a website, and attract investors, keeping a slice of the profits on each successful trade.
If your reputation grows, you could also use your website to offer seminars, educational programs, and trading school courses to those new to the game.
Day trading will not be the right business for everyone.
It takes immense courage, discipline, and an analytical, determined mind to be successful as a financial trader, but for those who do master it and who have what it takes – there’s no limit on how profitable it can be.
Very few will make it to the levels of legendary traders like George Soros, who started with a few hundred dollars and is now worth a whopping $11 trillion, but it is still possible to make a very healthy living as a day trader.
All you need is a solid internet connection, a fast and reliable source of information, a little capital and the right character and you could be next to become very rich indeed in the global financial markets.
As they say – If you’re not in, you can’t win!