More people are investing and trading online than ever before. In part, this increased interest in trading is because of the ease of access brought about by online trading sites.
A few decades ago, if you wanted to become a day trader, you had to have a lot of money, access to brokers, and extensive skills. Today, it’s possible to start day trading with as little as $1,000 or less. This is especially true when talking about trading in the Forex arena.
Day trading has the potential to be lucrative. There is also the potential for people to lose everything they’re investing in. That’s why many people opt to start with smaller amounts of money.
Is it really possible to make money day trading with just $1,000 or less?
Getting Started With Day Trading
Before jumping into day trading, there are a few things that you need to know and a few myths that need to be dispelled. Some people erroneously compare day trading with smaller amounts of money to gambling. Nothing could be farther from the truth.
Day trading is like any other business you get into. If you don’t do your due diligence and you don’t know what you’re getting into, you’re going to end up losing. Day trading is not making investments with the roll of the dice. It requires focus, practice, and attention to the rules.
Day trading is a lucrative opportunity for both men and women. The stereotype of the day trader is a man sitting behind a desk with a bunch of screens in front of him. But that is not the reality. Anyone who takes the time to learn the techniques and strategies can make real money with day trading.
You can’t successfully day trade if you’re day trading while working your 9-to-5 job. Day trading is like a full-time job. It requires your constant focus and attention. You can’t day trade 24 hours a day. There is only a narrow window of opportunity where you’re going to make most of your money.
It doesn’t require a university degree or an advanced understanding of every economic principle out there to be a day trader. You need to be 18 years of age and older. The more you know about the Forex market, the better prepared you will be.
Many people have that dream of taking $1,000 and turning it into hundreds of thousands of dollars. The reality is that this is not how it turns out for most people. You will make some money with excellent strategies. With day trading, as with other types of business opportunities, it takes money to make money.
The Basics of Day Trading With $1,000
Day trading is where you purchase and sell securities during one day of trading. Day trading can happen in just about every market, but it’s most commonly done in the Forex market and stock markets.
Successful day traders are well educated and have sizable funding. They understand the power of leverage and use short-term strategies to take advantage of price movements that happen in currencies or stocks that are highly liquid.
Day traders pay a lot of attention to the news. If there’s an announcement about economic earnings, corporate earnings, or things that are going to affect market psychology, they make bets based on these changes.
There are several strategies that day traders use.
- High-Frequency Trading (HIFT): This strategy relies on the use of complicated algorithms to exploit small fluctuations and market inefficiencies.
- News-Based Trading: This strategy takes advantage of trading opportunities caused by the psychological impact news has on the market.
- Range Trading: This strategy is where traders make their moves based on support and resistance levels.
- Scalping: This is where a person tries to make a lot of small profits on small fluctuations of prices throughout the day.
A Step-By-Step Guide to Day Trading
There are a few tools that are must-haves if you’re going to be successful at day trading. You will need a platform, fast internet, and a broker. The most important tool is your trading plan. Targets Trading Pro is an example of a futures trading solution. It uses the power of algorithmic trading to help you make money.
Step 1. Choose What You Will Trade
The first step is determining the type of financial vehicle you’re going to trade. It’s a common misconception that day traders only trade stocks. However, you can trade futures, Forex, derivatives, options, or currencies.
If you’re just starting, it’s best for you just to pick one and become a master of that type of market before moving to another. This will allow you to learn how to choose your trade wisely. Some of the financial instruments you can trade include:
- Mutual Funds
Step. 2 Find a Good Day Trading Broker
Once you know what you’re going to trade, you will need to get a broker. Brokers are eager to attract day traders because the more you trade, the more commission they get. Don’t be too eager to accept the first offer that comes your way. There are a few things that you consider.
- Charting: You need the best in charting tools and software. There is an endless amount of charting software available. Each platform has its own unique features and strategies. If you put 100 day traders in a room and ask them to pick their favorite charting software, you would probably get 100 different answers.
- Commissions: High commissions, margin rates, and other expenses could destroy your day trading profits. If you’re a high-volume trader, you may spend hundreds or thousands of dollars on commissions. When choosing a broker, factor in cost.
- Customer service: Customer service is everything. If you’re in the middle of a trade and something falls apart on the trading platform, you will need a broker who can help you.
- Paper Trading: Does your broker have paper trading? This will let you practice without using your own money. If you’re nervous to jump in, paper trading is an awesome way to test the waters.
- Regulation: The firm you work with must be regulated by an agency with key metrics that it must adhere to.
- Reputation and Safety: The broker you work with should have extensive data and cybersecurity in place. Don’t choose new brokers just because they’re offering bonuses.
- Research: Day trading is speculative. It requires that you do your due diligence. Fundamental research and technical research are at the heart of the work any successful day trader does. This means that the broker you choose must have phenomenal research capabilities.
- Speed: Execution speed, especially real-time execution, is a must-have for any broker. A nanosecond delay in trading could affect your profits. You want to work with a trader who has a top-notch platform that is easy to use.
Step 3. Choose the Time of Day You Will Trade
You want to trade at the same time every day. It’s not uncommon for traders to trade one hour after opening, which is between 9:30 AM and 10:30 AM Eastern Standard Time. Or they will trade the last hour before close, which is 3 PM to 4 PM Eastern Standard Time. It has been noted that traders who focus on the open and close of the day make more money. During this time, there’s more volatility.
Step 4. Pick the Stocks You’re Going to Trade
Choosing the stocks you’re going to trade can feel overwhelming because there are thousands of options. If you’re starting with just $1,000, focus on one or two stocks. Only trade these stocks. Another option is to do research every day on what stocks are going to do well. If you’re just starting out, trying to take in that much information can be overwhelming.
Step 5. Decide How Much You’re Going to Invest
You need to know how much money you’re able to risk on each trade. The recommendation is that you risk a maximum of two percent of your account per trade. When trading with just $1,000 and starting out as a trader, avoid trading on margin. Get comfortable with general day trading first. Margin trading is not free. You will pay higher interest rates for the money you borrow.
Day Trading Terminology You Should Know
Every day trader needs to understand day trading terminology. Here are some of the more common terms you should become familiar with.
- Bear or Bearish: This is a weak market. Traders think that stocks overall or a specific stock will go down in value.
- Bull or Bullish: This is a strong market where stocks are moving up. A specific position can also be referred to as bullish if it’s expected to go up.
- Day Trading: Buying stocks, shares, or other investment vehicles and intending to sell them the same day
- Float: This refers to the number of shares available for trade. The float is the equivalent to the supply level.
- High-Frequency Trading (HFT): A trader uses powerful computer analytics and automatic trading to perform large orders at high speeds.
- Initial Public Offering (IPO): When companies do an IPO, they offer a set number of shares to the market to raise money. If they offer 10 million shares at $10 a share, the IPO can go up to $100 million. This money is used to invest in growing the business.
- Pattern Day Trader Rules (PDT): According to this rule, if traders take three or more trades in a five-day period, they need to maintain a minimum account balance of USD 25,000.
- Professional Day Trader: Although the term is often used to describe someone who day trades for a living, from a professional standpoint, it refers to traders who have a license with either their Series 6, 7, 63, 65, or 66.
- Stock Market Hours: 9:30 AM through 4 PM Eastern Standard Time Monday through Friday. On holidays, the markets are closed or close at 1 PM.
- Swing Trader: This contrasts to day trading as it may require overnight hold times. Swing traders can hold stocks for one night or many nights. These are short-term investments.
How Can Targets Trading Pro Help Day Traders?
Targets Trading Pro is the ideal algorithmic futures trading solution for beginning traders, experienced traders, traders with unlimited resources, and traders working on a tighter budget. With over 10 years of experience, Targets Trading Pro has knowledge and expertise that can be used to help optimize and automate your training experience.
Automated training can boost profitability and minimize manual work. Targets Trading Pro offers a simple, clear platform that gives you the power to trade fully automated or manual. Targets Trading Pro can help traders remove the emotion and make logical moves that are precise and can bring profit. So, what are you waiting for? Start your one week trial today!
It’s possible to be successful at day trading with just $1,000. You will need to do your due diligence, research your investments, research your broker, become familiar with the terminology, and make sound decisions that lead to long-term profitability.