Before you start day trading with real money there are three things you need to do and have:
- Strong knowledge of day trading terminology and technical analysis
- A strategy that’s been back tested and proven profitable
- Proof of profitability in a day trading simulator
#1 – Strong knowledge of Day Trading Terminology and Technical Analysis
With years of day trading under my belt, I can confidently say day trading is an exceedingly difficult skill to become competent at, let alone master.
You can think of day trading like playing a professional sport.
Your ability to make money is based 100% on your ability to perform day in and day out.
Attempting to day trade without any sort of training or education is a recipe for disaster and loss of capital.
The first step to learning day trading terminology and technical analysis is reading books and watching videos! This is the process of gaining knowledge. But remember, just because you read a book on sky diving doesn’t mean you’re ready to jump out of an airplane!
One of the challenges with learning to trade is the overwhelming amount of information out there. Often times the things you learn will be contradictory.
The reason is because the technical analysis or entry and exit requirements that work for one strategy, may not work at all for another strategy.
It’s not helpful to your long term success to learn a little bit of 100 different strategies. It’s much better to learn as much as possible about 1 strategy that is proven profitable.
So while you’re looking at who you’ll learn from, it’s always important to ask yourself, is this person actually profitable?
I take pride in being one of the most transparent traders out there with all my trades verified and even posted on our YouTube channel.
Unfortunately, you’ll find very few people provide proof of profitability. The information they provide should always be taken with skepticism.
Whether you decide to learn more in my premium classes, or learn from somebody else that is proven profitable, the first step to learning how to day trade is studying.
If you’re curious, you can see our courses offer an extensive curriculum that covers everything you’ll need to build your day trading business. You can check out the course syllabus here.
#2 – Developing a profitable day trading strategy or adopting a proven day trading strategy
It took me about 2 years to develop the strategy I trade. As an aspiring trader, you have two choices. You can either adopt a strategy already being actively traded by other traders, or you can create your own.
If you create your own, be prepared to spend months, or even years backtesting and refining before you can trade with real money.
Most beginner traders, rather than trying to reinvent the wheel, decide to master a strategy that’s already been proven profitable. After mastering that strategy, traders may decide to put their own spin on it by making a few changes.
Regardless of your approach, it’s important to have a specific setup, trading system, or methodology that you’re comfortable with when you start trading.
It allows you to develop a competency at something, rather than trying to find opportunities for several setups at once, never really getting good at any one setup.
You can always learn more down the road if the setup/system you choose isn’t ideal for you.
The important thing is consistently sticking to one thing at the beginning and mastering it. If you try to trade 5 different strategies at the same time, how do you know whether or not one of them individually is profitable if one of the others is costing you a lot of money?
#3 – Converting Knowledge to Skill by Practicing in a Day Trading Simulator
You may have taken a few quality trading courses, read a book or two, and have been watching our daily trading breakdowns and feel like you’re ready to trade.
But the reality is you’re probably not ready. Beginner day traders notoriously overestimate their ability, start trading with real money, and lose.
Intellectually understanding day trading and actually being able to react to opportunities and effectively executing them in real time are two different things.
This is where practice comes into play.
You need a trading simulator where you can practice in real time your strategies until you are comfortable with order entries and trade management.