There’s this perception in the marketplace that day trading is an easy way to strike it rich. And while many people have gotten rich from day trading, it’s definitely not easy. If you’re thinking about becoming a day trader, there are some important things you need to know ahead of time.
5 Topics and Issues to Consider
Day trading is a controversial topic, which is probably what has led you to stumble upon this article. There are arguments for and against it, which leads many people to feel overwhelmed by a sense of confusion.
“Google ‘day trading’ and you will see why there is controversy! The profit potential of day trading is perhaps one of the most debated (and misunderstood) topics on Wall Street,” Shobhit Seth writes for Investopedia. “Countless internet scams have capitalized on this confusion by promising enormous returns in a short period of time. Meanwhile, the media continues to promote this type of trading as a get-rich-quick scheme that always works. The truth lies somewhere in the middle.”
As you look at day trading, you need to view it as a personal issue. It doesn’t matter if it’s right or wrong for other people. The issue is whether it’s right for you. Here are some things to know and consider:
Time Investment
Day trading isn’t something you can do in the morning before you go to work, or during your one-hour break in the middle of the day. In order to be successful, you have to make a huge time commitment. This means at least 4-6 hours per day, but more than likely 8-plus. If that’s something you can’t commit to, think twice about whether you’re really prepared for this.
Risk Tolerance
Day trading is a lot like riding a boat in the middle of choppy waters. You’re going to go up, down, up, down. One minute, you think you’re heading in the right direction, and the next a wave comes crashing in and throws your heading off. You need a considerable level of risk tolerance to thrive in this sort of environment.
Business-Like Approach
“The way some people go about learning to trade could be best described as hobbyist in nature,” James Kessick writes for NetPicks. “These people may actually achieve a high level of knowledge, understanding and expertise in the trading world. But all too often, you’ll also find a lack of professional business-like approach to trading that’s needed to be successful in the long run.”
You can’t be a successful day trader if you aren’t willing to take a business-like approach to the matter. Treating it like a hobby might feel less stressful, but it’s going to limit your gains and ultimately sink your investments.
Need for Education
Part of taking a business-like approach is recognizing the need for education. You don’t know it all and never will. By surrounding yourself with people, courses, programs, and content, you can grow your understanding of day trading and enjoy better results.
Prevalence of Misinformation Online
There are a ton of myths online about day trading. Some shine a positive spotlight on it, while others dissuade people with issues that simply aren’t true. With the prevalence of misinformation on the internet, always fact check and verify before believing something.
Day Trading: It’s Not for Everyone
Let’s be clear about one thing: day trading isn’t right for everyone. If you don’t have discipline and a willingness to learn, you will fail. Take an honest look at yourself and figure out what the optimal course of action is for you at this stage of your life.
