30Day trading is a popular trading strategy that involves placing multiple short trades per day, with each trade being closed out before the end of the trading day. It is known as a profitable, yet demanding trading strategy that can give good results when practiced effectively. Of course, each trading strategy comes with its own strengths and weaknesses, along with things that should be considered. If you feel that day trading is the right strategy for you, be sure to consider the following:
Factor #1: Money
Just how much cash do you have available to deposit into a trading account? As a day trader, you’ll need to open at least a couple of trades each day, so you’ll probably want to deposit enough money to keep you afloat for a while to avoid quickly reaching a $0 account balance. This is especially true if your broker charges fees for making a deposit. You’ll also want to set some realistic expectations related to how much money you’re planning to make. If you start out with a $25 deposit, you won’t be making thousands of dollars right off the bat. Meanwhile, a larger deposit of around $30,000 might leave you with returns around $3,000 per month. Of course, everything is subjective when you’re trading, so it isn’t wise to set specific monetary goals. Still, you’ll want to figure out how much you can afford to deposit and be sure to have a realistic idea of how much money you might make.
Factor #2: The Cost of Trading
Each broker charges a different amount for spreads, commission charges, transaction costs, and so on. Some brokers offer competitive pricing, including low spreads and possibly even fee-free withdrawals. However, others will charge you an arm and a leg to trade and might even throw in some nasty surprises like inactivity fees, account maintenance charges, etc. In order to wind up with more money in your pocket, you have to be able to make enough of a profit trading that your winnings aren’t gobbled up by these fees before you ever even receive your withdrawal. Fortunately, you only need to invest a little time into finding a good broker with attractive costs to avoid this problem. Be sure to read the terms & conditions for each option you’re considering to look for information about these hidden fees and avoid brokers that aren’t upfront about their charges, as this is a sign that a company is trying to scam you.
Factor #3: Stress
Did you know that short-term traders like day traders and scalpers are actually exposed to more stress, which can lead to psychology-related trading issues? This is mainly because you have to work quickly while taking in a lot of information. The timed pressure can make it easier to make mistakes along the way and you might find that your head feels like its spinning after a really tough trading session. If you already struggle with anxiety on a daily basis, you’ll probably have a difficult time adjusting to the pressure that comes with this type of trading strategy. One thing you can do to help take some stress off is to make sure you aren’t crowding your charts with unnecessary indicators, take a break if trading becomes too much to handle, etc. However, day trading might not be right for you if you can’t keep up with fast-paced trading. In that case, you could consider swing trading or another strategy that isn’t as stressful.