What Do You Need to Start Day Trading?
Capital
You’ll need capital in your accounts to buy your first set of stocks. Though most brokers with account minimums allow traders to start buying and selling assets with as little as $250, you’ll need more capital to see significant profits once you consider the costs associated with commissions.
Most professional day traders recommend that new users start with a small $1,000 deposit to test their trading strategy—you can always invest more later on if you see success. New day traders should be particularly aware of the SEC’s pattern day trading rule; accounts with less than $25,000 l at the end of the day are limited to three round-trip trades per five-day period. Once you exhaust your three round-trip trades a week, your broker must cut off your trading privileges until the next five-day period begins or you make a deposit into your account to bring your account to $25,000.
The pattern day trading rule means that it’s important for low-level day traders to be very selective about what they buy and sell because their accounts are limited.
A Source for Live Quotes
Unlike long-term investors, day traders buy and sell their stocks quickly. Some traders may even purchase a stock and sell it within the span of 15 minutes. Day traders need a reliable source for instantaneous stock market quotes to know when to buy and sell. Check out our list of the best free sources for stock market quotes on the web and bookmark one or two options that appeal to you.
Realistic Aspirations
If a day trading course or website claims that stock trading can make you thousands of dollars overnight or that you can follow “simple tricks” to wealth, they’re probably trying to sell you something. Successful stock trading takes time—many professional traders confess that it took them over six months to begin to see regular profits, as well as countless hours of practice with a dummy account. Have realistic expectations for the amount of money that you’ll earn and don’t be afraid to make mistakes—they’re an important part of the learning journey.
What Should You Look For in a Day Trading App
An Intuitive Layout
No matter how well it works or how many cool research tools it offers, the best day trading app in the world is useless if you can’t figure out how to use it. Check out YouTube app tutorials and demonstrations before committing to an app to ensure that you like an app’s look and feel and that its functions are intuitive and quick to execute.
Low Fees and Commissions
You’ll probably find your day trading app through your stockbroker, whose fees and commission schedule you should already be familiar with. However, if this is your first venture into stock trading, you’ll want to choose an app provider who offers low fees and commissions in order to maximize your trade profits.
Generally, you can expect to pay between $4 and $8 per trade, although many brokers also offer deep discounts for professional brokers who execute many trades a month. Want to learn more about low-commission stockbrokers? Check out our guide to find the right choice for you.
Full-Web Functionality
Some brokers severely limit an app’s functionality, encouraging traders to use their desktop versions. For example, Vanguard’s app only allows traders to view a snapshot of their profile—they may not buy or sell stocks from the app (which is why the king of low-cost index funds didn’t make it onto our list). Before you commit to an app, make sure that it offers all of the features and functionality of its desktop counterpart.