I’m going to lay out some basics below but before I do that I’m going to jump ahead and advise you that you do not need to open a brokerage account to learn to Day Trade. And its best that you don’t. You’ll save yourself a fortune and you’ll stay in the game longer if you don’t.
When I started, my first Broker was TD Ameritrade (Now Charles Schwab) and their ThinkorSwim Platform. I think that’s probably an OK place for many people to start. The ThinkorSwim (TOS) platform has every asset, every indicator, every symbol that a new trader might need. It also has robust technical support and a lot of users who have provided YouTube tutorials for education and customization. And the Data Feed, which usually cost you extra at other brokerages is included with your TOS account.
But TOS is probably not a good long term solution for many traders. TOS has a reputation for occasional technical problems, slower execution speeds than other platforms and its possible that you can do better on commissions elsewhere. But you have to look for yourself. Not sure if this is true as of this writing but opening an account was free and an upgraded data package only cost a small deposit into the brokerage account. I kept $50 in the account for years and charts and data were always available. I don’t know if if its still like that.
If I were to start now, I would not open a brokerage account at all. I would paper trade using TradingView’s free or inexpensive options. And I would try to learn as much as possible before I put a penny in brokerage account.
Then I would probably try one of the brokers that can connect to directly to TradingView’s platform. You can find the list of brokers in the Tradingview “Connect To Broker” Tab once you are on any TradingView Chart webpage. But eventually I would have outgrown TradingView since I use several tools and customize multiple charts and time frames so that I can “see” the market.
I would not Day Trade on any mobile platforms or any of the Free platforms like Robinhood, although I’m sure it is certainly possible.
The list below outlines all of the things you must figure out before you can really start on your journey to being a consistent Day Trader.
With that said, I was never shy about opening and closing brokerage accounts. The whole trading game is really about finding what works for you and that’s going to be radically different from person to person. And it’s going to take a lot of experimenting, which is why you don’t want to be losing you money in the market. The initial costs can be expensive.
You will have to get through….
Education and Research
- Learning the Basics: Understand what day trading is, the different types of trading, and the markets you can trade in.
- Studying Technical Analysis: Learn how to read charts, use indicators, and identify patterns.
- Understanding Risk Management: Get familiar with concepts like stop-loss, take-profit, and position sizing.
Planning
- Set Goals: Define what you want to achieve with day trading. Is it supplemental income, or are you planning to make it a full-time gig?
- Choosing a Market: Stocks, Options, Forex, commodities—each market has its own characteristics and requirements.
- Develop a Strategies: Whether it’s scalping, momentum trading, or swing trading, have a strategy in place.
Tools and Setup
- Trading Platform: Choose a reliable trading platform that suits your needs.
- High-Speed Internet: A stable and fast internet connection is crucial.
- Hardware: A decent computer with multiple monitors can help you keep track of various charts and news feeds.
Practice
- Paper Trading: Use a demo account to practice without risking real money.
- Backtesting: Test your strategy on historical data to see how it would have performed.
Risk Management
- Capital: Start with an amount you can afford to lose.
- Stop-Loss and Take-Profit: Always set these parameters to manage your risks effectively.
Start Small
- Micro Trades: Begin with small trades to get a feel for the market.
- Review and Tweak: After each trading day, review your trades, learn from your mistakes, and adjust your strategy as needed.
- Become Consistent: Being consistent means being able to trade in all market conditions. It takes time to see a lot of market scenarios.
Regulatory and Tax Considerations
- Pattern Day Trader Rule: IF you trade stock, in the U.S., you’ll need a minimum of $25,000 in your account if you make four or more trades within five business days.
- Tax Implications: Consult a tax advisor to understand the tax obligations related to day trading.
Continuous Learning
- Markets are dynamic, and continuous learning is crucial. Keep up with market news, trends, and updates to your trading platform.
My Brokers/Platforms/Charts
I still have multiple Brokerage accounts but my main account is with AMP Futures. Since I only Day Trade Futures. And at this writing only S&P Futures.
AMP is bargain futures broker that has a spotty reputation according to some sources. But I have never had a single days trouble from them and found their support team more than helpful on multiple occasions. The caveat for some traders might be that they are not “Robin Hood” easy in getting your money in and out of the account. They don’t take credit cards.
The Data service I use is CQG provided by AMP Futures. It’s very inexpensive at around $5.00 per month
I use Sierra Chart for my charting. Mostly because has the least expensive ($42.00/month), feature-full and reliable Market Profile package I can get my hands on. Sierra chart used to be free with AMP Futures. But not for a while now. AMP futures does offer several other pretty nice free platforms that you can trade with. Among them, Tradingview (as mentioned above), Quantower and MetaTrader.
I also have an account with TastyTrade – Mostly due to their Options Platform. I use them for longer term investments.
I have an Interactive Brokers for a retirement account. But I did use them in the past to Day Trade Stocks. (Which I no longer do). They have a pretty good reputation. I used to Connect a platform called DAS Trader Pro to my Interactive Brokers account. That was years ago but it was a good platform that is used by professionals.
As I mentioned, I also used ThinkorSwim and some other products including, Investor RT Charts some pretty expensive data packages and other platforms that I ultimately found unnecessary. I’ve known from the beginning that I’m in trading for the long haul so spending capital to learn has never been an issue.
As a wise trade said to me “Do you want to save money, or make money”.