If you are looking for a way to make some extra money, becoming a day trader may be strong option. After all, you are probably already looking at the stock market as a way for you to save for retirement and long-term. As you want your retirement account go up, you may be thinking you can make some short-term cash as well. That is where becoming a day trader can be helpful.
At the same time, you may be wondering how to become a day trader. There are a few steps you need to follow. You need to have a device you can use to trade stocks, have a strong brokerage account, fund your brokerage account appropriately, and learn how to buy and sell stocks.
Step 1: Find the Right Device
First, you need to find a device that will allow you to trade stocks, bonds, and mutual funds. Do you have two options. The first is to use your computer. The second is to use your mobile device. Ultimately, you can use your computer and your mobile device to buy and sell stocks and bonds. You will probably end up using both at some point.
The most important thing you need to remember is that your device has to have a reliable internet connection. You will be using the internet to day-trade. If you do not have a reliable internet connection, you may not be able to trade stocks as quickly as you would like. You might even end up executing trades at different prices than you thought.
Step 2: Set Up Your Brokerage Account
After you have a computer or mobile device that connects to the internet, it is time to set up a brokerage account. There are numerous options available when it comes to brokerage accounts. Common examples include Franklin Templeton, Robin Hood, Charles Schwab, and Fidelity. There are a few common questions you have to ask when you are trying to find the right brokerage. These include:
Common Questions When Setting Up a Broker
Do you charge a commission on your trades?
You should try to find a broker that does not charge commissions on your trades. If you have enough money in your brokerage account, they may be willing to waive all commissions.
How many equities do you trade?
You should not have your training capacity limited by the available equities on the platform. Most brokerage platforms have access to thousands of equities.
How long does it take for my cash to settle?
You do not want to spend time waiting for your cash to settle. You would like to trade immediately. Clarify this before choosing a broker.
Find the Best Trading Platform
There are several trading platforms you want to consider. These include:
- If you plan on trading stocks professionally, you may want to take advantage of Interactive Brokers, as there are a wide variety of customizable features you can use.
- If you are new to the world of day trading, TD Ameritrade has a platform with a relatively short learning curve.
- If you want to have access to as many equities as possible, you may want to explore a well-rounded platform such as Fidelity or Charles Schwab.
These are just a few of the many platforms available.
Step 3: Get the Right Settings on Your Brokerage Account
You also need to make sure you have the right settings on your brokerage account. These include:
- You want to have access to real-time trading numbers and so you execute your trades at the price you see.
- You would like your cash to settle immediately. See if there is a way you can connect your brokerage account to your bank account so that your funds settle as quickly as possible.
- You should check to see if you are automatically reinvesting dividends. Make sure to check this box if you want this setting.
After you have your settings, it is time to fund your brokerage account.
Step 4: Fund Your Brokerage Account
You need to connect your brokerage account to at least one bank account. That way, you can move money quickly from your bank account to your brokerage account. The first time you move money over, it may take a little longer, as your bank and broker work to verify your identity. After you make one transfer, this should proceed quickly in the future.
Once you have finished all these steps, you should be ready to start day trading! Make sure you read a few guides to learn how to pick stocks!