Key Takeaways
- Learning how to start day trading begins with picking a volatile, liquid market, like stocks or forex, and mastering a strategy.
- You’ll need at least $25,000 to day trade stocks legally in the U.S. with a margin account, but practicing on a demo account first keeps your cash safe while you build skills.
- Successful day traders thrive on discipline, risk management, and the right tools, think platforms like Thinkorswim, and Intellectia AI, to spot opportunities fast.
- Day trading offers quick profits but demands patience and a cool head, as losses are guaranteed and fees can eat gains, start small and scale up only when you’re ready.
Introduction
Starting out as a day trader is not a simple task, it is full of excessive amounts of research, continuous practicing, and of course, remaining resilient during those dreaded downturns. I’ve been there myself, riding the ups and downs of day trading for years, and I’ve learned that it’s not just about luck, it’s about understanding the game.
Hense this comprehensive guide on how to start day trading, so you can get a better understanding of where to start, some pitfalls you may want to avoid, and hopefully get you on the right path toward becoming a profitable day trader.
What is day trading?
So, what’s day trading all about? Day trading, simply, is the buying/selling of stocks, futures, forex, etc.. within a single day. The aim of the game is to capitalize off price swings and accumulate small profits so as for them to become larger returns.
Either way, by the end of the session, you’re out/closed your trades, with no overnight bets. That’s the core of how to start day trading: fast moves, daily resets.
Day trading vs. investing
Before we dive deeper into the crux of how to start day trading, we need to clarify the difference between investing and day trading. Day trading is more of a type of investing whereas, investors are in it for the long haul, building wealth slowly with an eye on a company’s fundamentals, like earnings or growth potential.
You, as a day trader, shouldn't care so much about that. You’re all about price action: up, down, doesn’t matter, as long as it moves and you profit. Investors study balance sheets, day traders study charts.
Investors usually avoid volatility whereas a day trader thrives on it. Without those wild price swings, you’ve got nothing to work with. That’s a big piece of how to start day trading, embracing the chaos, and trading with the trends.
Pros and cons of day trading
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What makes a successful day trader? Is it right for you?
I'm certain you have scrolled through social media, or heard of someone retiring because of day trading, but honestly, the majority of these day trading "professionals" are likely distorting reality or lying to you.
Day trading is not for everyone, you must master being disciplined, and calm, and remove the most sense of emotion whilst trading. Many pro-day traders likely have savings to fall back on and so the risk of losing, for them, is somewhat offset.
You will need to acquire these traits to ensure you have the best chance of successfully making it as a day trader:
- Focus: Stick to one market (stocks, forex) and master it, don't constantly follow what might be "going up".
- Discipline: You’ve got routines, ensure you create a list of rules and stick to them.
- Risk smart: Be cautious with everything you do, and place strict limits to protect your cash.
- Curiosity: Consistently do your research into every area that might affect that day's trading.
- Cool head: Trading is an emotionless game, and you must approach it as such. When you win, or lose, you must keep a cool head.
- Patience: Any form of trading is a get-rich-long game you'll likely need to wait a month perfecting your strategy and accumulating those smaller gains.
If you're unable to tick each of these boxes, then day trading might not be the game for you. It's a long-term process that will produce numerous defeats along the way, and remaining resilient through it all can be a real struggle.
How much can you make day trading?
You’ve seen the hype that many traders bragging about six-figure days. Can you actually get rich from day trading? Well, yes of course, but it may take years to perfect your strategy to ensure you minimize losses whilst maximizing those wins.
At the early stages of beginning to-day trade, you're very much likely not going to get very far. Your earnings hinge on your overall account size, trading strategy, and time dedicated to learning day trading.
Aiming for 1% daily returns sounds doable, $250 on a $25,000 account, but it’s tough to hit consistently. Fees, taxes, and bad days will eat into those profits quickly.
How much money do you need to start day trading?
For stock trading (margin accounts)
In the U.S., you need $25,000 for a margin account to day trade stocks legally, four trades a week flag you as a “pattern day trader” (PDT) under FINRA rules. Less than that, and you’re locked out till you hit the mark.
For stock trading (cash accounts)
However, if you're considering opening a cash account, meaning you don't burrow to enhance your account's profits/losses, then there is no minimum, but your overall margins will be significantly lower compared to a margin account.
This is the same for international brokers. You can start with any amount, but fees and tax hassles may begin piling up.
Day trading forex or crypto
There are no PDT rules applied to trading forex or crypto, so you can start with any amount. It might be wise to begin with a demo account before committing any real capital to trade, as the risks are incredibly high among forex/crypto day traders.
How to get started day trading?
After going through all that, you may find yourself feeling ready to dive in and begin your day-trading adventure. Below are some basic step-by-step tips on getting started with day trading.
Choose a market
Focus on a single financial instrument. This could be stocks, forex, futures, crypto, etc. But keep in mind you will need volatility, high liquidity coupled with reliable data and information.
Choose your strategy
Pick a specific lane, one that caters to your needs and is able to deliver you consistent wins. You could adopt momentum trading, supply & demand trading, or price action trading, all of which may offer a unique angle for your trades.
Choose your tools
You must choose which tools you will need to execute your day trading plan. You can find a list of tools below that offer traders all sorts of features:
- Tradingview: Great for charting tools and technical analysis
- ThinkOrSwim: Great for customizable trading
- Intellectia AI: Perfect for analyzing the stock markets using AI
Find your community
Find a community, this is often incredibly helpful since you can bounce ideas off numerous experienced traders. You can join Reddit’s r/Daytrading or Discord groups. Skip the hype squads; find real players sharing wins and losses.
You’ll learn faster with mentors.
Practice on a demo account
This is something that helped me a lot. Demo accounts are incredibly underrated, especially ones that offer backtesting integration. Find a platform that can offer you historical data so you can hone your trading skills before risking any money.
Start trading, but slow at first
Now you should begin trading, with real funds. But, start small, gauge the market, and test your emotional limits, once you begin seeing small gains, begin scaling up slowly, and then you'll be on your way to being a day trader.
Day trading strategies for beginners
Momentum trading
Momentum trading is all about chasing explosive price movements, stocks or assets that are surging (or occasionally crashing) hard and fast, often by 20% or more in a single trading session.
The idea is to catch the wave early and ride it for as long as the momentum holds, then bail before the inevitable pullback or reversal. It’s high-octane and thrives in volatile markets.
- How it works: You’re looking for stocks, forex pairs, etc... with unusual volume and sharp price spikes, often triggered by news (e.g., earnings beats, FDA approvals) or herd behavior. Get in as the move gains steam, and exit when the surge begins to slow or hits a key resistance level.
- Tools:
- RSI (Relative Strength Index): Measures overbought (above 70) or oversold (below 30) conditions.
- Moving averages (e.g., 10-day, 50-day): A shorter MA crossing above a longer one signals momentum building. Use them to confirm the trend.
- Pros: Big wins if you time it right; works well in bull markets or breakout scenarios.
- Cons: False breakouts kill you. Momentum can vanish fast, leaving latecomers bag-holding.
Trend trading
Trend trading is about patience and riding a stock’s consistent directional move, up or down, over hours or a full session.
Instead of chasing wild swings, you latch onto a clear trend, buying at support in uptrends or shorting at resistance in downtrends. It’s less adrenaline and instead, more discipline.
- How it works: Identify a trend using historical price action (higher highs/lows for uptrends, lower highs/lows for downtrends). Enter when the price pulls back to a support level in an uptrend (or resistance in a downtrend) and ride it to the next key level.
- Tools:
- ADX (Average Directional Index): Gauges trend strength, above 25 means a solid trend, and above 40 is a powerhouse.
- Parabolic SAR: Dots below price signal an uptrend; above price, a downtrend. It’s a trailing stop-loss guide too, exit when the dots flip.
- Pros: Lower stress, predictable if the trend holds; great for trending markets.
- Cons: Choppy, sideways markets chop you up. Trends can reverse without warning.
Trading the news
Trading the news is about pouncing on market-moving events, earnings reports, Fed rate decisions, and geopolitical shocks.
The price of a financial instrument will fluctuate drastically during these times, so entering within seconds is crucial.
- How It Works: Prep ahead, and know the event time and expected impact (e.g., EPS consensus, rate hike odds). Enter as the news hits, riding the initial spike or drop. Use technical levels to set targets and stops, because volatility will likely be high.
- Tools:
- Pivot points: Pre-news S1/R1 levels guide your exits. Post-news, watch for breakouts beyond them.
- Fibonacci retracement: After a spike, the price often retraces to 38.2% or 50%, your entry or exit zones.
- Pros: Massive moves in minutes; predictable catalysts.
- Cons: Slippage and spreads widen during the news.
Conclusion
As you can see, starting out as a day trader is a challenge and has numerous hurdles ahead. However, it is an achievable dream, one that will require numerous years to perfect. With the right tools and discipline, you may begin seeing high profits.
Some day traders use AI to guide their investment decisions, and one tool stands apart from the rest and that's Intellectia's Day Trading Center feature. I highly recommend you take a look and explore whether this feature can suit your needs.
