Are you new to the trading world and don’t know how and where to start? uncertain about how much you need to invest initially? worried about taxes? Well, look no further. In this article, you will get all the basic information about when, where, and how to start online trading. This is a basic guide of day trading for beginners.
Beginners guide to online day trading business
Before you decide to start trading in stocks, there are few questions you need to ask yourself to get a considerable return on investment. Knowing what you expect as a return, Knowing what tools you need for trading, and knowing how much time you can spend on this because you’ll be investing a considerable amount of money. If you want a decent return you need to allot a considerable amount of time to be successful in your endeavor. Once you’ve figured out all of these things and you’ve answered all of your questions, you are ready to enter the world of online trading.
Difference Between FUTURES AND STOCKS Markets
You may have an idea about stock market but futures market is a bit different. Both have their pros and cons. If you are familiar with the stock market you might understand that about the equities and that you can hold a share (a piece of the company) for as long as you want. For the futures market, you are buying a contract for exposure to physical assets that can cover agricultural products to currencies and oil. Future contracts can also be bought that cover stocks and something as unimaginable as the weather.
Both are dealt with different exchanges but you need a broker whether you are buying stocks or a futures contract. For stocks, you buy shares and hold them as long as you want but in futures, you buy and sell your commodity at future date. Unlike stock where you buy and hold the stock, the Future is a technique of entering and exiting the market. Contrary to stock where the money is deducted at the time of purchase, in futures you have to give money upfront known as margin to cover losses. The positive side to this is that with a small upfront amount leverage over a larger asset is gained.
Basic investment and equipment required for online trading
Now that you have an idea about stocks and futures. Before investing in the futures market you need to have a startup capital based on your financial conditions. The minimum amount of money you would need to start investing in stocks is approximately $10K. Anything less than that, there’s a good chance you won’t make a lot of money out of it due to fees and commissions (amount of money a stockbroker will charge). Apart from that, you need to analyze tick and minute data and it needs to be real-time opposed to stocks where the end of day data is more suitable. Day trading for beginners is all about how well equipped you are for online trading and for that you need a decent laptop with a good internet connection so that you don’t miss any opportunities. You need to reschedule everything based on your locations because the market is changing with every passing minute. You need good software and a broker with good customer service and believe me, this matters a lot.
The way forward
Now you have got the basic know-how of trading. Start from the last point I mentioned in today’s episode that is education. You need to educate yourself before jumping in so there are no surprises when you start trading. Apply all of this information and see where it takes you. If you’re doing well enough stick to the basics and keep on doing what you’re good at. If you’re struggling, you need to stop right away before you waste any more of your money and re-evaluate and see what you are doing wrong and fix those mistakes so that you can earn a decent return on your investment.
Check out our Money Mondays Episode #7 to dive deep into this subject and learn how to start trading and making a reliable income.
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