Tips on how to make money through day trading in the stock market

I don’t know how often you hear this, but I’m sure you are familiar with reading such types of claims, either on the internet or from an acquaintance of yours.

These revelations usually provoke mixed feelings in us.

Initially, we got excited knowing that this possibility of rapid gains exists for regular working people, but then we experience some anxiety, pondering that we might be losing an opportunity for ourselves.

So, is this possibility real? Is it for me? Well, we will now discuss some of the points that involve the universe of day trading.

What is day trading?

Day trading, day trade, or intraday trading, is a trading modality used in financial markets, which aims to obtain profit from price fluctuations, throughout the day, of financial assets.

A speculator in day trading, whether professional or amateur, is called a “trader.”

There was a time years ago when the only people able to trade actively in the stock market were those working for large financial institutions, brokerages, and trading houses.

However, the scenario has changed, and many easy-to-use trading apps out there in the market have made day trading easier than ever.

A wide variety of techniques and trade models

Day trading employs a wide variety of techniques and strategies to capitalize on these perceived market inefficiencies.

The list of options is practically endless, and so is the literature on the subject, as each trader can develop his own trading style.

So in this case, since you won’t be able to cover all, the idea is that you gather and learn some strategies of the most prominent traders.

From that and after a while (and hopefully returns), you will start to discover what strategies, stocks, and markets you prefer.

What should I be careful about?

This is the main advice I have for you to start day trading: you should only risk money you can afford to lose.

Which means that you should never use money you will need for daily living expenses, retirement, take out a second mortgage, or use their student loan money for day trading.

That said, let’s take a look at some of the facts that every investor should know about day trading, according to the U.S. Securities and Exchange Commission:

Be prepared to suffer severe financial losses

Day traders typically suffer severe financial losses in their first months of trading, and—a red pill for you—many never graduate to profit-making status.

Day traders do not “invest”

They do not know for certain how the stock will move; they are hoping that it will move in one direction, either up or down in value.

Investing is something else, and it is more related to the financial health of a particular company or a possible appreciation in the price of a specific asset.

Day trading is an extremely stressful and expensive full-time job

Day traders must watch the market continuously during the day at their computer terminals. It’s extremely difficult and demands great concentration to watch dozens of ticker quotes and price fluctuations to spot market trends.

Day traders depend heavily on borrowing money or buying stocks on margin

If you don’t want to end your day trading career with a debt, you’d better study how margin calls work.

Don’t believe claims of easy profits

Keep in mind that most people don’t tell their day failure stories.

So before you start trading with a firm, make sure you know how many clients have lost money and how many have made profits.

Watch out for “hot tips” and “expert advice” from newsletters and websites catering to day traders

Once again, do not accept these claims without investigating whether these people are being paid to tell you this.

Remember that “educational” seminars, classes, and books about day trading may not be objective

Find out whether a seminar speaker, an instructor teaching a class, or an author of a publication about day trading stands to profit if you start day trading.

The more conservative that instructor’s speech is, the more chances there are that he is a serious day trader.

Check out day trading firms with your state securities regulator

Trading firms must register with the SEC and the states in which they do business. Verify this information and also check if the firm has a history of problems with regulators and clients.

Written by

Gabriel Gonçalves