Day Trading for Complete Beginners
If you’re wanting to learn how to trade. Now is a great time to start learning.
Here are the 4 steps to get started with day trading for beginners:
1. Open a paper trading account
The first thing to do is to get a paper trading account. Paper trading means you are trading simulated money in your brokerage account.
I recommend paper trading first because why would you risk your real hard earned money and dive right into trading with the money, when you have no idea what you’re doing?
Some of my recommended brokerage accounts for paper trading are:
Thinkorswim
Thinkorswim is completely free to sign up for Americans. For Canadians you need a $5k USD maintenance in the account in order to paper trade with live market data.
Thinkorswim also includes an on-demand feature that allows you to go back in time and backtest historical price action on almost any stock. So that's an extremely valuable feature for day trading beginners.
Interactive Brokers
Another good one for paper trading is Interactive Brokers, available in both the US and Canada. With IB, you need to purchase their data subscriptions in order to receive live market data.
Webull
A third broker for paper trading to get started with is Webull. This is a free commission broker platform. While I do not recommend $0 dollar commission brokers like Webull, Robinhood and a few other apps for live day trading, I think for paper trading it’s totally fine. Especially if you’re brand new and just getting warmed up with learning the ins and outs of day trading.
2. Start learning to trade with free resources online
Now that you have your paper trading account set up, it’s time to start learning. This is the part where a lot of people will tell you to buy some $5K DVDs and $200 a month alerts plan.
I would start utilizing free resources online first to start learning. There's literally so many resources out there. I literally have been making short and simplified videos for over a year now talking about day trading, trading strategies, key things to look for, how penny stock pumps work, and I have videos each weekend reviewing my trades for the week.
Most people out there drink the Kool Aid that trading is easy, you just spend $200 on alerts for one month and you’ll make thousands of dollars easily, working 1 hour a day and from anywhere in the world.
Let me reassure you, after trading for 6 years now, the reality is far from that. Trading is NOT easy, controlling risk, maintaining discipline and focus is a constant battle on a daily basis. Like I mentioned in this video, even if you are trading part time while working a full time job, you are essentially running a part time business that requires full time effort.
There’s nothing wrong with these paid courses and educational DVDs that actually provide value, and not just selling the dream. but I’d just recommend complete beginners to dabble with free resources first before making such costly investments.
3. Tracking your Day Trading setups
After you’ve started paper trading and learning some setups and strategies with free resources, the next step is to journal your trades. That means spending 5 to 10 min each day writing down your entries, exits, and the set ups from your day trades.
It's only by tracking your trades, that you can start seeing what you are good at as a trader.
Questions to answer:
Do you have a higher probability of success by going long or short?
Are you better trading large caps or small cap penny stocks?
How well are you managing risk for each set up?
Do you trade using technical indicators for entries?
Are you better at trend following and only buying after a reversal trend has formed?
These are all the important questions you need to find out for yourself. Remember, you can see what other people are doing on social media, but what works for others, is most likely not going to work for you.
That's what journaling your trades will do for you. Once you figure out a few consistent qualities that you are good at, maybe it’s dip buying the morning panic, or swinging overnight. Once you have one or two, then just focus on those setups, and block out everything else.
4. Join a trading community to advance learning
By this point, you should know whether this day trading business is something you really want to take it even further and start expanding, or for most people 90%, this is the point where they realize, this is not for them, it's too much time and effort, and they give up. And that's totally fine because it's risk free.
For the rest of the 10% of beginner traders who want to start taking trading more seriously, now's the time to start looking for a premium community of like minded traders to learn and trade with. No, I'm not talking about joining places where they alert you to buy and sell. That defeats the whole purpose of learning to trade for yourself.
Without live guidance during market hours when you are trading, you can only go so far by yourself. In a community with other like minded traders is where you start learning about trading beyond just the patterns that so many try to memorize.
Yes, I understand why online trading education gets a bad rep. I’ve gotten tons of emails and messages from traders who have bought into the Lamborghini marketing, and that's extremely unfortunate. I totally fell for that years ago too, but now I've learned from that experience and know what NOT to do.
All I can say is, if it sounds too good to be true, it probably is. Do not fall for these lifestyle ads or any promotions that tell you making it in trading is fast and easy.
The reality is, trading is not easy, but if you are willing to spend the time to learn, put in the hard work and effort, it can be done, slowly but surely.
Disclaimer: These are my recommendations of how I would personally start again if I could go back in time six years ago. Again, these are my personal opinions only, not financial advice.
