How to Make Money at Home Doing Day Trading?

Article by Lizzie Liang

First, what is day trading? Day trading means the practice of buying and selling financial instruments (such as shares, futures, options, etc.) in order to obtain profit in the same trading day. People participating in day trading are called active traders or day traders.

Day trading, like any other business professions, requires in-depth training, proper planning and a lot of practice. Thousands of beginners will enter a trading day in hopes of making easy money. However, only the few of those who are well educated, have a solid trading plan, and the discipline will prosper in this business. Many of them are making thousands of dollars a day, trading only a couple of hours, and spend the rest of the day free with family and friends, doing what they love to do.

But how does one become a successful trader and make real money in this market? Take a look at this article and you will find out:

Step 1. We have to get a solid understanding in the financial market. We have to learn what financial instruments are available in the market as traders need the instrument that suits them the best. Secondly, we must become familiar with day trading strategies and try to find one that we like and understand the best. Search engines like Google and Yahoo are good places to find good trading courses and strategies. We will need to conduct our research in depth and use our judgment to find what suits us the best. We must also find the right trading tools such as market research tools, real-time trading software, and sign up with a discount broker that we trust.

Step 2. Once we have chosen our trading strategy, the next step is to write a trading plan. Yes, we need to put our trading plan on paper. In this trading plan, we need to write down our goals-what we want to achieve by day trading. What are your goals in the short and long term? Do we want to get a little extra income in addition to our day job, or do we want to become financially independent by day trading? We should also write a detailed plan for the trading activities every day, which includes pre-market studies, our entry and exit strategy, and our tasks aftermarket.

Step 3. Establish a paper trading account. Once we have drawn up our trading plan, we should test the water with paper trading or trading simulation. This is very important because we do not want to risk real money before we have a good understanding of the game. There are a lot of trading simulators available for free in the market, or we can see if our stock broker provides a real-time simulation platform for trading. When we run a simulation, we should try to think of ourselves as using real money and act according to our trading plans.

Step 4. Set a daily limit, both for profit and loss. Once we have built up confidence in day trading, we should try to trade once or twice a week with real money. It is important to set a daily limit for both gains and losses. For example, we can set a profit target of $ 200 daily, and a loss limit of $ 100. When we reached either limit, we should stop trading. Turn off the computer and go take a walk or have a cup of tea. Do not over trade.

Step 5. Have a system of good money management in place. Before entering each trade, we must analyze the worst thing that could happen. How much can we afford to lose on each trade if we happen to lose in every trade we’ve entered for the day? Knowing our maximum affordable loss for each trade is important because we will then deliberately limit the size of our position for the trade and set our stop-loss even before our enter the trade. This prevents us from losing a lot of money and helps us stay in the game.

Step 6. Fix our emotion problems by writing a trading logs. For day traders, keeping our emotions under control is a major challenge and need lots of disciple and practice. Every day, we can be distracted by various emotions such as fear, pride, ego, etc. These emotions will prevent us from following our trading plan and eventually deteriorate our confidence. An effective way to solve this problem is to write journals on a daily basis. When writing them, we should analyze each part of the trade, and document the logic or emotion behind the trade. When we see ourselves falling into the trap of emotions, we must remind ourselves not to make the same mistake next time. With practice, we can train our minds to follow our logic and keep our emotions to ourselves.

Step 7 Rewards ourselves when we adhere to our rules. When we follow our strategy or trading plan to the letter, regardless of winning or losing trade, we must give ourselves a big pat on the back, because we have conquered our feelings and made a great leap towards day trading success and financial freedom. Once we have achieved our objectives in the short term, we must not forget to reward our hard work and achievements. Whether it’s a trip to Las Vegas or a cool iPad, put the reward in our trading plan, which will motivate us to achieve our goals. In the end, we deserve it anyway.

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