Day trading refers to buying or selling securities within the same day. While it is not restricted to any specific market, investors usually prefer forex or stock market for day trading. Day trading can be a lucrative career when done with due care. Since day trading involves the use of high leverage and diverse trading strategies, so you need to have sound market knowledge, skills, and experience to become a successful day trader. In this piece, we discuss some key factors to consider before you chose day trading as a home business. 

Factors to consider before choosing day trading as a home business

Starting from a selection of the right equipment to choosing the right market for day trading, given below are some factors you must consider before getting started.  

1) Equipment selection

You can only access the forex market online. Therefore, a computer, or laptop, with a stable internet connection is the prerequisite. Sometimes a mobile phone with a data mode enabled can also work great but is not recommended for novice traders. Make sure that your device has enough memory, and a fast processor to run trading software without interruption. For a desktop PC, you need to have a power backup in place as well. 

2) Selecting the right broker

The selection of the right broker is vital for successful day trading. Forex market is full of honest and scam brokers making it difficult for novice traders to select the best one. You need to be very careful before investing your hard-earned money. Check if your prospective broker has a good reputation. Do not forget to check the regulation status of your broker as well. Also, it is best to open an account with a well-established broker. A broker who has already been in the industry for several years is likely to be more competitive than a broker who is new to the industry.  In addition, make sure that you read broker reviews at Trading Dominance. 

3) Choosing a market to trade

You might have already decided on the market you wish to trade i-e- forex or stock market. However, you can also consider some other options, such as trading shares, indices, spot metals, energies, and cryptocurrencies. Each market is full of opportunities, but it is best to focus on a single market at the beginning of your day trading career. 

4) Trading hours

There is no hard and fast rule concerning timing selection to trade the forex or stock market. You can trade round the clock since the forex market remains open 24/5. However, there are a few hours when the market is supposed to be highly liquid. Usually, the best time to trade forex is when two forex market sessions overlap (i-e a new trading session opens before the closing of the existing market session). On the other hand, the stock market undergoes high volatility in the first 1-2 hours after an opening of a session. 

5) Devise a trading strategy

A trading plan is one of the most crucial factors that can make the difference between the success or failure of a day trader. A good trading strategy involves entry/exit points, TPs, SLs, an appropriate leverage, and risk levels. Once you have devised a trading plan, stick to it even if you lose some trades. Switching between different trading strategies can make you confused. Believe in yourself and keep placing trades. If you have carefully devised a trading strategy, you will end up making profits despite losing more of your trades for the day. 

6) Risk management

The forex market is one of the most liquid markets in the world. It enables day traders to make lucrative earnings fast. A common way to make quick returns is using high leverage. While leverage helps traders making more money, it also carries high-risk exposure. Therefore, proper risk management is essential to stay safe. It is best to use low leverage while day trading. Another way to manage your risk effectively is to staking not more than 1% of your capital on a single trade. 

7) Use demo accounts

Unlike other investment markets, day trading offers you to test your skills before losing your hard-earned money. You can use virtually funded demo accounts to learn, practice, and master different trading and money management strategies without risking your real money.

Final Words 

Day trading is becoming increasingly popular these days. Being easy to start and quick to generate returns, people have started day trading as a home business across the world. Like other businesses, day trading also comes with pros and cons. Therefore, you must consider all the factors discussed above before jumping into it. Remember, consistency with patience and effective risk management is the key to success in day trading.