When you learn how to day trade, you need to put in serious time and effort. Contrary to popular belief, this is not a get-rich-quick-scheme. You need to really get your head around stock charts, spreadsheets, Level 2 quotes and gappers. Those are just some of the terms you need to internalize.

One way you can hack your way through the early part of the learning (aka, the hard part), is by taking classes from those that made the mistakes and lost the money developing winning strategies. Check out Warrior Trading to learn more.

Learn to Manage Risk

Managing risk is essential to success as a day trader. You are never going to get to overall profitability if you are chasing crazy trades every day, based on hunches and intuition. All your trades need to based on research. And you need to break down the risk assessment for each one.

Every trade needs to have a stop-loss. That is the point where you jump out of the trade, when you have lost just about all the money you can stomach. There is no glory in sticking with a bad trade, hoping that the stock will rally and you will make back your losses and then some.

Bottom line: Cut your losses.

The thinking is, if you can limit your losses, then you can focus on making smarter trades going forward and your winners will pile up and outweigh the small losses on the bad trades you made.

Stock Picking Success

Beyond mastering risk management, it is all about picking stocks. That is one of the basic fundamentals of being a profitable day trader. You need to learn how to pick winners. The good thing is, there are strategies to learn. And, boy, do you need strategies. With thousands upon thousands of small-cap stocks out there, it can take time to sift through all of them for real opportunity.

That is why stock scanning software is so important. Now, starting out as a newbie, you are going to want to learn how to squeeze the most out of free trading tools, because you need as little overhead as possible, while trying to make yourself profitable.

Starting out, it also helps to be up on some veteran traders’ daily watch lists, where you can see what other people think might have on their list of potential winners. One of the most common stocks to make big moves on a particular day are gappers, or stocks that are set to open up higher in the morning, versus what they closed at the day before. You need to understand what breaking news or other catalyst might have these stocks ready to break, but there are techniques to be able to spot these stocks in real time.

Then you need to know when to grab them and when to dump them.

How & When To Trade

The ability to trade stocks in real time and get profits is hard-won. Many traders learned on the job, which means that they lost good money when they made a mistake. One of the best ways to learn today is by taking advantage of a paper trading simulator. That means that you spend time trading in a simulated market that looks and feels just like the regular stock market. But you are doing it with an account full of virtual money.

Good trading simulators have real-time Level 2 quotes, which means that you have an excellent understanding of the stock price and can get your orders executed right away. They work just like a real brokerage account.

You start with $100,000 in virtual currency and you get to apply techiniques that you learn from day trading education sites. Taking classes on momentum trading strategies and how to pick winners is great, but you need to give yourself practical experience. And you want to gain that practical experience without risking your life savings.

Challenge Yourself

Once you get good enough, you can start to challenge yourself. Fund a trading account with $1,000 and see if you can jump it up to $10K in a month. Not so easy, but fun to try if you have the time and resources.

Once you get to serious veteran status, you can try to replicate what this day trader did last year: Start with $583 and turn it into six figures in just 44 trading days. The traditional caveat applies: Don’t try this at home, ladies and gentleman (unless you have years of experience under your belt). And lest you think this is some sort of fishing story, check out the verified broker statements.

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