What Does it Take To be a Profitable Day Trader (Part 4)

Futures is a risky market for a lot of reasons, most notably because not everything can be forecasted or foreseen.

Day traders can move hundreds of thousands of dollars on the currency market, and never once visit any of the countries that they are trading with. While the Forex market has slightly less stringent restrictions and guidelines, they are not totally rule-less and you should know the ins and outs of this very fast moving market before even trying your hand at it.

At least until you have made enough trades to be comfortable with the process, you should stick to straightforward stocks. Just getting the hang of the speed of the day trading lifestyle can be tricky enough; so do not complicate things needlessly.

The Totals So Far

You have not even got to that first set of trades in your new life as a day trader and you should realize that by now you are down at least a couple thousand dollars. You have bought the new computer system, the stock trading software, and upgraded to Wi-Fi. So, are you still ready for that career change? (If this computer upgrade process has just bankrupted you, then you might need to rethink the idea.)

Day trader regulations are clear: you must have a minimum amount in a trading account to qualify as a day trader, if that amount is not met, a “minimum equity call” is issued- if the call is not met, you can lose the assets associated with the account, as well as a reduction of the amount of trading power that you have.

The regulations are lengthy and must be thoroughly read before making that first trade or you will find yourself in over your head in a quick fashion. That minimum amount is $25,000 for a day trader account- if you fall below that amount then the “call” is issued.

So far, you have invested at least $2500 in computer and software, and the $25,000 to open the trade account. That total is $27,500 just to get started. That is a high amount of money, especially with the current economic situation, so make sure that can really afford to lose that amount of money if something should fail. (Day trading is very risky, remember.)

Sit down and figure out a budget, including a loss cap that will show you clearly what you could afford to lose if you make bad investment choices or if you are really not cut out for the trading lifestyle. If that figure does not come any where close to the minimum trade account amount, then skip day trading.

Remember, these amounts are subject to, and very likely to change at any time. Keep up to date with the market and the requirements so that you do not find yourself in the middle of any nasty surprises.

Read more…

Day Trading Do’s And Don’ts: What Does it Take To be a Profitable Day Trader (Part 1)
Day Trading Do’s And Don’ts: What Does it Take To be a Profitable Day Trader (Part 2)
Day Trading Do’s And Don’ts: What Does it Take To be a Profitable Day Trader (Part 3)
Day Trading Do’s And Don’ts: What Does it Take To be a Profitable Day Trader (Part 4)
Day Trading Do’s And Don’ts: What Does it Take To be a Profitable Day Trader (Part 5)
Day Trading Do’s And Don’ts: What Does it Take To be a Profitable Day Trader (Part 6)
Day Trading Do’s And Don’ts: What Does it Take To be a Profitable Day Trader (Part 7)
Day Trading Do’s And Don’ts (Part 8-14)

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