To hold securities for a day – that is what Day Trading means. It can be tricky especially since it is challenging to master the strategy that you will use to successfully perform trades and get positive results at the end of the day. And if you don’t have a reliable trading platform like MetaTrader 5, you will surely stress out with all the things that need to be considered. But what does it really mean to day trade?
What is Day Trading
Day trading is when you open a trade and close it on that same day. If you are a trader that does trading on four consecutive days out of five business days then you are considered a pattern day trader. If so, your account will be offered different requirements and follows a different set of rules like $25,000 as the minimum equity requirement. If you buy and sell on that same day through a margin account, you will be labeled a pattern day trader and will pursue the pattern day trader rules.
How To Becoming A Pattern Day Trader
As mentioned above, you need to participate in at least four-day trades out of five business days. On the number of trades performed, it should also be 6% of the overall trading activity in all of those 5 business days. To be able to become a pattern trader, you must also meet the equity requirement on top of those mentioned above.
How To Do Day Trading
There are certain steps that you need to prepare to be able to successfully get through with day trading.
Do your homework
Before your trading venture, knowledge is your greatest weapon. As much as possible, research information about the stocks that you want to trade. Also, you must keep an eye on the market. Even the smallest movement can affect the price of your stocks. Therefore, you need to stay updated with the latest news in the financial world.
Don’t run out of funds
As much as possible, always keep extra funds available. There will come a time when you will be trading with these extra funds. Since these are your extra funds, you must also be ready to lose them. Remember that there is no certainty in trading. Never let a good opportunity pass by your shoulders.
In trading, you will have a lot of things to do. So basically, you will end up spending your entire day in front of the computer. After all, it wouldn’t be called day trading for nothing. Day traders must also have the characteristics of moving swiftly in every possible advantage in the market throughout the day.
You don’t have to invest in a lot of stocks in your first few months of trading. Make yourself comfortable first before you gradually increase the number of stocks that you handle every day.
Know the market times
In the morning, the market can be quite volatile as all trades enter during this time of the day. But at the end of your trading day, expect a more chaotic situation because many traders will try to take advantage of the last minutes. So for beginners, the middle of the day is considered the calmest and also the best time for you to open your trades. Also, you need to make sure that you are using MetaTrader 5 to maximize your advantage in the market.