Day trading is not considered to be investing in the
traditional sense, because you're not really investing in the
growth of a few select companies. Instead of maintaining
or growing investment over the course of five or 10 years,
day trading involves a quick buy and sell process intended
to earn a quick gain.
To get started, you should have a
minimum of $1,000, but starting
out with more is always better.
Some people borrow their initial
start-up capital, but this can put
you at a bigger disadvantage. If
you're not successful right away,
you will have lost your capital,
and you will still owe the money
Make Your First Investment
Your goal is to identify highly liquid
stocks and buy $1,000 worth of shares or
more in that stock. Once the purchase
has been made, you will need to monitor
that stock's performance in the market.
Your next objective is to sell as soon as
the stock price increases by a few cents.
Remember Tax Laws
Tax laws are applied differently for
stocks that are owned for a shorter
period of time. A stock you own for
one year or longer will be subject to
a 20% tax, but stocks you own for
less than one year are considered
personal gains. This type of income
is taxed at a 35% rate.
While day trading can be lucrative, it also comes
with higher risks than traditional investing. As long
as you have the patience and the disposable
income required to get started, you may be able to
use day trading to grow your wealth. However, just
like any type of investment, success depends on
developing a strategy based on research and a
keen eye for good investments.