How to Train to Be a Day Trader
- 1). Complete a degree in finance or economics at a major university. While this is not absolutely necessary, it will provide you with the underpinnings to understand market fluctuations and trends. This degree will also teach you basic stock trading and evaluation concepts such as how to read a balance sheet and an annual report.
- 2). Study diversification of assets. It is widely reported that more than 80 percent of day traders lose money doing it. To adequately trade stocks in this way, you must understand various levels of risk in an investment portfolio. Study the securities industry and invest in various vehicles such as certificates of deposit and money market accounts.
- 3). Apply to work for an investment advisory firm. These firms will typically hire you with the assumption that you will earn a Series 7 securities license while employed with them. This certification, requiring training sessions and a comprehensive exam, allows you to buy and sell shares yourself as a broker.
- 4). Build experience in the firm, learning market trends and terminology. Study the effect of splits and dividends on share prices. Build a library of annual reports and industry publications to use as reference materials for future investments.
- 5). Practice day trading with a stock market simulation game or merely on paper, documenting individual trades and net asset value projections. Consider capital gains taxes and brokerage fees, if applicable, in measuring your skill.
- 6). Study individual companies and industries to learn patterns and other useful information. Some day traders will buy and sell the same individual stock over and over after learning a substantial amount about its history.
- 7). Learn important government data release dates such as housing starts and the Consumer Price Index. The market can react to these announcements in a somewhat predictable way. Do the same with an individual company's earnings report.
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