I’ve put together a 3 step strategy on how anyone can become a day trader. What I like about this strategy is anyone can take it on, no matter how much experience with trading they’ve had.
Day trading is a pretty lucrative gig. Being able to work your own hours and from anywhere in the world sounds like a dream job. And it’s true – trading gives you freedom that pretty much every other job doesn’t. So here is how you too can get started as a day trader:
Trading is Risky
Trading by yourself is risky. The reality is that most people who try and trade on their own end up losing money. Trading like anything in life, takes lots of practice and knowledge. It’s not something you can just start doing on the weekend and you’ll suddenly get rich.
So that’s why I think the following strategy is the best way to be a day trader…
Step 1. Start by CopyTrading
In my opinion the best way to start being a day trader is to try Copy Trading. So what is Copy Trading? It’s where your account automatically makes the same trades a more experienced trader makes. You’re basically copying that trader.
eToro is the worlds largest social trading platform. It’s a bit like combining facebook and a broker. Whenever a user a makes a trade on eToro, it’s shared with others on the platform. But the really cool feature is that you can also automatically copy these trades.
Using eToro, you can browse through the profiles of profitable traders and find people who have made good gains in the past. You can then “copy” them. This simply allocates a portion of your account capital to copy every trade made by this trader. When they make a profitable trade, your account will too.
Why I like Copy Trading for starting day trading:
- Trade While you learn – Your account will be making trades while you learn more about trading. By seeing a real trader in action you’ll get first hand experience. It’s like being part of a mentor program!
- Access to Real Traders – you get access to connect with real traders. You can comment on the trades they make, ask questions and get feedback.
Step 2. Develop your strategy with a practice account
Once you’ve been copy trading for a while, you’ll probably have gained a pretty good understanding of how the markets work. Before you try trading on your own, it’s important to develop your own trading strategy.
Every day trader needs a strategy. Are you going to trade the trend or the range? Are you going to use technical analysis or fundamentals? This post isn’t going to go into details on any of these strategies.
The best way to develop a strategy is with a practice trading account. The good news is, that if you started with Copy Trading on eToro you’ll already have a practice trading account. Every eToro account has one and you can switch back and forth between your real and virtual accounts in a couple of clicks.
When I practice trade I like to use the same amounts of cash I would be using for real trades. I trade the exact same way I would be if I was using real money. Remember if you can’t make a profit in a practice account, you’re not going to be able to make a profit with a real account.
Once you’ve started making profitable practice trades you can start making real trades too 🙂
Step 3. Become a Full-time Trader
So how do you become a full-time trader? Here are my top tips in bullet form to take your day trading to the next level:
- Dedicate time each day for market research – trading does take quite a bit of time. Become professional about your trading by setting up dedicated working hours. This will also help stop you from “chasing” trades.
- Develop your mindset – the key to successful trading is developing the right mindset. This is sometimes called trading psychology. Do an online course in it and learn to control your ego and risk.
- Become a “Popular Investor” – a popular investor is what eToro calls the traders who are copied. You get extra income if you’re a popular investor. It’s a great way to supplement your earnings.
- Diversify – It’s important to diversify your income as a trader. Even if you’re trading full-time, you should still have funds invested in something managed like Acorns. A lot of traders make secondary incomes through either copytrading or other education services.