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How to land a job as a day trader in USA
What is a day trader?
While there are several strategies that one can choose from when exploring Forex trading as an investment option, day trading is one that allows you to best capitalise on unexpected but lucrative market activity. As a day trader, you are required to consistently and actively engage with the markets using intraday strategies, meaning that you do not maintain a position overnight. With that said, one of the benefits of day trading is that it helps you avoid overnight risk and market fluctuations that may lead to great losses. These overnight risks may be political or economic, and are often fuelled by macroeconomic conditions.
Becoming a day trader
Day traders need to have a great understanding of the markets, historical data to guide strategies and decisions, sufficient resources, as well as the ability to identify lucrative entry and exit points.With that in mind, in order to be a successful day trader, you need to be self-aware and understand that it requires financial and market knowledge, discipline, risk tolerance and consistent commitment to the task at hand. Below are some of the steps to follow in your efforts towards becoming a day trader in the USA.
- Sufficient resources
Although there is no set amount of money that is needed to become a day trader, as this is dependent on your trading activity and risk tolerance, it is advised to sufficiently cushion yourself. Given the potential losses that exist and market volatility, it is best to have contingent funds and all the necessary systems in place.
- Understanding of markets
With the USD being such a key player in trading activity for all traders, as it forms part of all the major currency pairs, you need to learn about USD and popular currencies in order to be an effective day trader. Some of the other popularly traded currencies are the EUR, JPY and GBP. Additionally, you need to be mindful that although the Forex market is open 24/7, trading hours and activity may differ based on your chosen currency pair and news that effect your currencies of interest.
- Trading strategy and plan
As is the case with just about any pursuit, financial or otherwise, having a clear strategy and plan will improve your chances of being successful in your endeavours. Due to currency fluctuations and market volatility, it is essential to understand that a strategy that proved successful for some time could suddenly change unexpectedly, which must be anticipated and planned for accordingly. Moreover, the strategy must tie in with your trading resources and objectives, taking into consideration factors such as financial resources, lucrative entry and exit points, assets, risk and frequency of trading.
- Knowledge on financial management and brokerage fees
Being able to manage your finances and allocating a certain amount to trading, after considering the risks and potential returns of each, is key. Determining the profitability of each move beforehand may guide your risk tolerance. Moreover, it is important to note that because day trading is characterised by frequent transactions, higher brokerage fees tend to apply. As such, these must be taken into consideration and adequately planned for.
- Practice and work towards your trading goals
Novice traders are often advised to gain a better understanding of trading through demo accounts which can be used to practice. More experienced traders may also opt to test their strategy through simulation on a test account before fully implementing it, which may also come with brokerage or subscription fees that differ per platform. All in all, the abovementioned steps are geared towards certain trading goals, such as expansion, which must remain the focus at all times.
